A new study conducted jointly by Economist Impact and SAS has shed light on the possible trajectories that the insurance industry could take by 2040. The findings suggest a stark contrast in outcomes, ranging from leveraging technology to enhance climate resilience and provide personalized offerings to a situation where insurance becomes accessible only to the wealthiest individuals.
The report titled “Revealing the Paths to 2040: Four Possible Scenarios for Insurance” delves into how global cooperation and technological progress could mold the future of the industry. Four distinct scenarios have been identified. In the “Isolationism and unregulated growth” scenario, a lack of global cooperation results in missed climate targets, causing insurers to pull out of high-risk markets and widening the insurance protection gaps. On the other hand, the “Customer-centric transformation” scenario sees successful global cooperation facilitating the use of technology, enabling insurers to prioritize prevention and offer personalized, data-driven solutions.
The “Selective climate resilience” scenario depicts advanced economies implementing sustainability policies and climate risk strategies, while lower-income regions struggle to focus on survival, leading to an uneven distribution of resilience. In the concerning “Industry collapse” scenario, insufficient collaboration and innovation make it impossible for insurers to adapt to mounting risks, forcing many out of high-risk markets and increasing reliance on local risk pools. Edwin Saliba, a senior analyst at Economist Impact, emphasized that these scenarios are meant to assist insurers in preparing for uncertainties and seizing opportunities. Meanwhile, Franklin Manchester, principal global insurance advisor at SAS, cautioned that the industry risks failing to fulfill its core purpose if it continues to price out customers in high-risk areas because of climate change.
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