What’s next for the insurance market in 2018?
by Heat Recruitment
2017 has been a bumper year for the UK’s insurance industry – with increased regulatory pressures in light of Brexit, greater risk than ever in the form of cyber-attacks, and the introduction of various new legislative requirements under GDPR, you’d be forgiven for believing a break in proceedings was overdue.
The WannaCry ransomware attack in May 2017 resulted in one of the fastest industry changes in living memory. Affecting over 200,000 computers in 150 countries, it represented one of the most major wake-up calls for businesses with regards to their cybersecurity practices. Indeed, many businesses have now integrated more holistic security practices -cyber-insurance making up a vital puzzle-piece in this shift. In 2017, this market generates between $3m and $4m. By 2025, it is expected to reach as much as $20bn.
With this background of exponential capital growth, however, we saw predictions abound in 2017 for automation and artificial intelligence software, as well as the associated use of analytics to derive value from disparate data sets. With the advent of Brexit, this set of aims has been somewhat put on the back-burner – instead overtaken by significant compliance requirements under GDPR, MIFID II and the IDD.
2018 will see the requirement for compliance with numerous directives and regulations. The European Insurance and Occupational Pensions Authority (EIOPA) and the Financial Conduct Authority (FCA), for example, have worked to finalise the Insurance Distribution Directive (IDD). This directive must be adhered to by 23 February 2018, and is designed to encourage greater competition between insurance firms whilst increasing customer protections.
According to Kareline Daguier, Director at PwC: “In some areas the FCA is gold plating the IDD and seeking to align it with MiFID II requirements. Insurers and insurance brokers have a few more months to prepare for IDD implementation and those efforts are expected to continue well into 2018.”
Brexit, then, is proving somewhat of a sticking point for the industry in terms of compliance. Indeed, organisations are now putting their growth and development on hold, instead restructuring to allow continued access to EU markets once the UK leaves the EU. One of the most significant issues of which, according to Daguier, is uncertainty around contractual obligations – namely, paying out claims on contracts written pre-Brexit, and occurring in a post-Brexit environment.
For 2018 – a period of uncertainty – the focus for the insurance sector will be on developing a ‘business as usual’ strategy. Whilst opening outposts in other EU countries may indeed seem like a draining prospect, in reality, Brexit has forced insurance businesses to grow. The change has the potential to be extremely lucrative, with numerous additional markets opened.
Once this has been completed, the remainder of 2018 can, and will, be dedicated to the development of new technologies and efficiencies to boost profit margins. What’s next for the insurance industry? Regulation, legislation and most importantly, a huge level of growth.
If you’re looking for your next career move in this sector, we have created our Ultimate Guide to Insurance. At Heat Recruitment, we help link employers with the latest legal talent. Get in touch. We’re here to help.
By Dave Bell