Friday 29 Mar 2024
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KUALA LUMPUR (April 30): The worldwide insurance sector is expected to maintain robust growth in the coming years despite a considerable displacement of funds occasioned by the digital transformation.

According to research data analysed and published by online trading portal Comprar Acciones on Wednesday, the global insurance industry was worth US$6.1 trillion in early 2020.

The portal projects that it will grow at a 3.5% compound annual growth rate (CAGR) to US$7.5 trillion (about RM30.78 trillion) by 2025.

Comprar Acciones said the figure includes US$800 billion in premiums from US healthcare payers.

It said that traditionally, these figures are not included in the sector’s revenue.

However, it said there had been an increase in demand for converging digital health services and products, such as wellness products. This increase has made the figure more significant in the recent past.

Additionally, the portal noted that due to ongoing acceleration onto digital channels, some traditional premiums might not be renewed.

This could completely change the revenue landscape in the future for insurers, it said.

Citing Accenture Research, it said around US$140 billion worth of current insurance revenue is likely to shift towards technology-enabled insurance products.

The switch is set to affect the insurance of smart homes and connected vehicles, triggering a shift to behaviour-based models.

Comprar Acciones said traditional insurers could lose an additional US$140 billion to insurers offering a digital distribution experience.

It said this will come about as more and more customers buy insurance from third-party platforms and digital channels.

Overall, the industry is expected to remain resilient and keep growing. But to harness this growth, insurers will need to reimagine business operations and find ways to benefit from the digital shift.

Those who rapidly shift to technology-led offerings are likely to take the lead.

Those who fail to do so risk losing out to new entrants and digital-first competitors, it said.

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