According to research by EY, consumers' insurance priorities have evolved, opening doors to opportunities that engage customers with new value propositions and allow them to compete on more than just price. Among the key findings, EY identified that:

COVID-19 has further exacerbated consumer demand, in access to information, transparency and flexibility.

Consumer awareness is increasing around the health of their financial security.

Top consumer concerns center on financial well-being and family protection from unexpected events.

"After the dramatic changes of the last few years, it has been proven that the industry is ready for unexpected development and disruptive changes. In the coming years we expect ecosystems to become a predominant business model. We know that this has not escaped the executive agenda of insurers in Central America, however it still requires investments and the support of regulators motivated to close the gap with other more developed regions and generate more competition in the market", said Ninoska Uzcategui, senior manager of the Consulting area of EY Central America, Panama and Dominican Republic.

According to the expert, the advance of digital technologies is also inevitable, which puts the insurance sector -traditionally slow compared to other industries- under more pressure than ever.

Challenges that represent new opportunities

Opening to new ecosystems

The new landscape offers many opportunities to simplify product delivery and make it easier to source solutions leveraged and implemented with third-party capabilities, which will help insurers improve distribution costs and achieve more reach into the population. Data sharing with third parties also adds to the equation, to drill down to the customer, improve the experience and pinpoint coverage costs, Uzcategui explained.

"Technology has made way for multiple players in multiple markets, there is much more emphasis on reaching the end customer directly (B2C), and many mass service providers are looking to diversify the value portfolio by incorporating financial and in many cases protection attributes. In the coming years, these types of schemes will intensify, representing a challenge for insurers to incorporate, create alliances and compete. Under this approach, for forward-looking insurers, there is no shortage of potential competitors or new partnerships to explore", she said.

Social deepening and inclusion

Looking ahead, these trends can inspire insurers as they seek to lead the transition to a strategy that deepens the foundations of our population; promotes financial wellness and inclusion and protects society against threats we can barely conceive of today.

Personalization and innovation

For the analyst, today's insurers must offer a broader portfolio of products to remain relevant to consumers seeking a high degree of personalization. Innovative data management techniques and the ability to establish product "factories" are key to designing better products and bringing them to market faster.

And it's not just about innovating with products. Digital transformation programs can also drive innovation in back-office processes.

"Insurers can lose if they don't invest more in innovation, learn to experiment more and fail faster. Cultural change and different skill sets are as important as technology upgrades. It requires new thinking, a clear purpose and strategic vision as much as new business models", commented the EY Consulting expert.

The race to digitize or go digital

The most effective digital transformations are those that balance short-term results and value with long-term evolution, moving faster today for quick wins, which help the organization act with more agility.

"Insurers must cultivate key capabilities that are necessary to enable and support digital transformation over time. As such, speed to market and organizational agility to implement change are imperative and measure improvements with ROI models that self-fund and make the long-term transformation vision sustainable", she said.

Combining these elements enables the capabilities to compete successfully in the face of the great pressures of the market, the expert said.

Translated by: A.M