The Role of Insurers in 2030 - Addressing talent shortage and maintaining proximity

Transformation of the insurance business and future challenges

As the world slowly emerges from the effects of the pandemic, companies like insurers have seen their business models stretched to the limit and are now embracing the changes necessary to survive.

Heidi explains that, during the pandemic, the importance of communication and frequent interaction at NN was reaffirmed. It brought the employees closer together during a time of great uncertainty. “In preparation for future crises, we have learned that from day one, we must focus even more on human capital. Initially, we might have been too focused on the processes and the organisation to keep the business running and perhaps not enough on the well-being of employees. We quickly adjusted that, but in the future, that focus will be there from day one.”

After the crisis, the P&V Group’s mission of ‘offering protection to as many people as we can’ is more relevant than ever. It soon became clear that the role of insurers was no longer simply to provide policies and that the insurance business needed to go a step further, beyond insurance. The health crisis revealed that the role of insurers is no longer limited to selling protection against certain risks; insurers need to go beyond this by providing advice, focusing on prevention, and incorporating greater sustainability into their business models.

The challenge for insurers is to create value in the long run for all stakeholders and to continuously search for balance in creating value for customers, staff members, brokers, agents, investors, cooperators, and society as a whole.

Hilde: “The vision of the P&V group and its different brands is offering protection to as many people as possible and making sure that people are well insured. Not too much, not too little, and at the correct price. It’s an inclusive vision of insurance.”

Finding a future-proof strategy for reaching out to clients

As mentioned above, the role of the insurer has always been to cover the insured for different kinds of risks during uncertain times.

Although insurers differ slightly in their approach based on their business models, now, more than ever, insurers are connecting with customers through digital channels, and this trend won’t change any time soon. Dorsan believes that personal contact creates trust (whether the contact is physical, digital, or a combination of the two). The most important aspect of this trust occurs when the customer has a specific situation, and the insurer is required to respond to that specific situation. Hilde’s view is that physical distribution channels will always be necessary because it’s all about trust, and people don’t trust tools—they trust other people. This is where the broker’s role becomes important. Using digital tools not only brings brokers closer to people; it also enables them to focus on developing human relationships with their customers. This means brokers, who play a significant role in the Belgian landscape, also need to reinvent themselves in a world where digital and direct distribution models are gaining traction. In this context, Dorsan believes that the most likely future scenario involves adopting a mixture of channels (fully digital, mixed, fully physical) to cater to different needs.

For Jean-Philippe, the issue is not whether client contact should be digital or physical, but rather that the sector needs to adopt a different mindset: the butler’s mindset. This means taking on an advisory role. Sometimes customers sign a contract, and the broker or insurance company does not inform them of the next steps to take. In today’s world, people also expect the insurer to be informed about their personal situation.

Another element to consider is product complexity. Simple, straightforward insurance products can, of course, be handled entirely digitally. But even so, when investing in certain pension products with underlying funds, the client needs to be advised in a professional way that creates trust and a certain proximity. This, in turn, should allow the insurer to gain a fundamental understanding of the insured’s needs and create a more customized experience.

Trust and proximity between the Belgian customers and their insurers

Currently, the panelists unanimously observe a need to create more trust between the insurers and their clients. The perception exists that Belgians care relatively little about their insurance, which could be interpreted as a sign of confidence. At the same time, Belgians seem very reluctant to declare claims because of possible limits in their coverage and because their premiums could increase.

According to Cedric, this shouldn’t be regarded as a sign of confidence, but rather as something that’s driven by a lack of transparency and simplicity. Most people are unable to present accurate summaries of their insurance policies due to their complexity. Hence, insurance companies, policymakers and regulators are responsible for simplifying the insurance contract and offering process, and for making them transparent and easy for everyone to understand.

As for the reluctance to submit claims, it seems to be the opposite at Alan. The claim declaration rate at Alan is very high because the submission processes are all as streamlined as possible. Of course, in a traditional insurance business model, this has a strong impact on margins and loss ratio. That’s one of the reasons Alan developed a different business model where the focus isn’t on the loss ratio and maximizing the margin on insurance premiums; instead, the company recharges a membership fee that represents all the services they offer.

The other panelists addressed this view by stating that their clients are not reluctant to declare claims because of the trust they have in their broker.

Heidi: “People have confidence in their brokers. Whether it’s P&V, NN, or Athora, the broker has the whole view.”

Investing in skills for the future - attracting and retaining the right people

As with many industries, the insurance sector is confronted by labor market shortages. The insurance sector is often portrayed as old-fashioned and slow. Insurance isn’t seen as the most attractive industry to work in because it’s unknown to the public, according to Dorsan. The range of profiles that are needed and the fact that insurance offers real opportunities to grow and learn every day is not sufficiently well known.

For this reason, insurers need to better communicate the challenges the industry faces and the variety of available roles. Insurance careers span an incredible range of skills and talents—from actuaries and analysts to data scientists and marketers to technical specialists and engineers … and the list goes on. Working in insurance or one of the many related fields offers opportunities that extend far beyond the walls of a workplace.

The fact that more people join the banking sector than the insurance sector can also be attributed to our education system, according to Heidi. In higher education, there are many classes related to the banking sector but a very limited number of insurance-related classes. This creates a significant challenge for the insurance sector, which is trying to attract the right individuals for the right positions.

The panel also agreed that it is essential for insurers to convey their core values as businesses. According to Hilde, the values of the company need to be embedded in a company’s culture and the way it does business. Strong leadership is important, and it gives people the opportunity to develop themselves according to values they can identify with.

A degree is not always a requirement for certain roles; passion, alignment of values, and interest in the story behind the organization are equally as important. In the war for talent, greater effort should be made on a company level: companies need to broadcast their vision and mission. But it is equally important to exert more effort at a sector level.

Insurance and ESG: how to make an impact

The panel agreed that further incorporating ESG (Environment, Social, and Governance) into their businesses will be necessary to continue their operations. Alan and NN strive to have a positive impact by investing heavily in prevention. They have been developing many tools that encourage people to take control of their health to prevent hospitalization. Heidi adds that creating sustainable impact is very important at NN. It is part of its mission ‘to help customers to live a long and happy life’.

On the other hand, society is observing a considerable increase in the frequency and impact of natural catastrophes. In this context, Hilde believes that insurers can play a huge role in ensuring that a more resilient world is built. Building a resilient world is about infrastructure, crisis management, and building programs in advance to ensure that when a catastrophe occurs, the impact on people and objects can be limited. It’s about prevention and investments.

The insurance sector has a responsibility to invest in the right funds to make the world a better place. A genuine change is possible if the insurance sector invests in a sustainable economy. Making the world resilient will ensure that risks remain insurable in the future, but this can also be regarded as a kind of protection by the insurance sector. It’s about the full spectrum of ESG.

Athora, for its part, has three convictions related to sustainability: impact through investment, reducing their own ecological footprint, and building the sustainability of the business.

Heidi: “We inform our brokers and our clients continuously about the ESG aspects of each fund so that clients can make a conscious decision about which fund they want to invest in.”

The role of the government in legislation and pensions and the partial privatization of social security

Dorsan indicated that people should consider privatizing their own social security and reconsider their reliance on the state pension because it is in jeopardy long-term. Therefore, according to Hilde, “We should think about another way of organizing solidarity.” She mentioned that it is impossible to cover all risks privately as people sometimes need state intervention. One possible solution could be to have solidarity at a very broad level organized by the government, without any selection of risks to ensure that everybody in society is well protected. On top of a very strong first pillar of social security, people could opt for complimentary insurance. Young people who are starting their careers now and hence paying for their pensions later, should establish a plan B with additional private insurance.

As far as legislation is concerned, the panel is convinced of the importance of regulation in the sector. The purpose of regulation is clear, but in some cases, when interpreted and put into practice by the regulators, it seems to miss the point and even create the opposite of the desired situation. It adds complexity and administrative burden in a strongly regulated sector and complicates the dialogue and understanding between insurers and the supervisory authorities.

The story of Alan, the first new insurer on the French market in 30 years, illustrates this point. According to Cedric, the three main hurdles in establishing a new insurer on the market are European and national regulation and compliance with legislation, meeting the capital requirements and finding the right people. It would be beneficial if policymakers and regulators could collaborate and brainstorm with new market players. He added that constrictive legislation not only limits entrepreneurship but also slows the pace of innovation.

On the other hand, regulation can drive transformation and change in operating models, which can lead to improvements in addressing customer centricity. It can also drive entrepreneurship if you have people in the company who can ensure that the company is compliant. For smaller companies, building a skilled team to ensure the company’s compliance can be challenging.

Hilde: “We should think about another way of organizing solidarity.”

Jean-Philippe: “Regulation can push transformation and change in operating models, which can lead to improvements to answer customer centricity.”

Conclusion

Over the past few years, the world has been confronted with considerable uncertainty, making it difficult to predict the future, even in the short run. The macroeconomic challenges of the last two years have strongly affected our personal lives and our society. Insurers will likely continue to face the same challenges in the coming years. They must therefore continue to invest in finding skilled personnel, creating and maintaining proximity to their clients and organizing their business in a more sustainable way.

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