We live in a time of amazing changes, both in terms of technology and the economic environment around us. These changes create new opportunities as well as significant threats for insurance carriers, which may well be the operational equivalent of deciding if a glass is half full…or half empty. Opportunity and threats are, in reality, opposite sides of the same coin.
I recently had the opportunity to co-host a technology forum that was jointly sponsored by Aite-Novarica Group and LIMRA/LOMA. We clearly had a meaty set of issues to explore, starting with the top 10 trends impacting life and annuity carriers in the current planning horizon. We covered areas like economic pressures, evolving technology stacks, and changing demographics. Below are some of the key points uncovered at the forum.
To set the stage, it’s worth exploring a few economic stats. The unemployment rate is at a 50-year low, economic growth remains surprisingly robust, core inflation rates are coming down, and interest rate hikes should provide some level of relief for those in businesses where asset/liability matching and long liability tails are important. While there might be a recession of sorts, it seems increasingly likely that the Federal Reserve can engineer a soft landing.
With that backdrop, technology advances race forward. This includes increasingly competent solutions to core processing functions, improvements in hosting options, and the introduction of new generative AI tools (e.g., ChatGPT) that raise both operational and ethical questions. For those in the information technology world, it’s hard to imagine a more interesting time.
Of course, technology isn’t the only thing moving quickly. The regulatory space might also be described as dynamic. For example, Colorado recently introduced regulations on the use of AI and big data as it relates to consumers. This state is unlikely to be an outlier.
In addition, the demographic shifts underway in North America will have profound implications for insurance carriers. While many were scrambling to deal with the pandemic fallout, millennials rose to represent 50% of the labor force, carrying with them notable changes in living and spending patterns. The oldest of their cohort are now 40 years old, and they are rapidly being joined by Zoomers in the workplace, even as younger baby boomers and older Gen Xers prepare for their own third acts. How rapidly are the younger generations taking over? Zoomers are projected to be 30% of the labor force by 2030. Combining them with millennials, the percentage of these generations in the U.S. workforce swells to an eye-popping 75%.
These groups have different views of careers, loyalties, and protection needs. Carriers hoping to be successful will need to determine how this will impact their value chains and develop action plans. Quickly.
The pace of change is both real and breathtaking. This will be a fascinating time as we approach the middle of the 2030s. Innovation, in this fast-paced environment, is clearly going to be important for carriers. We are excited to once again be hosting our Silicon Valley Innovation Tour in June. Details and registration can be found here.