Samil PwC: "Insurance Must Evolve into a Risk Management Platform"

Samil PwC Releases 'Next in Insurance' Report
Transformation Model of Insurers Divided into Four Stages
"Shift Will Focus on Customer Understanding and Prevention"

The insurance industry is shifting from a focus on post-event compensation to a proactive, prevention-centered approach, evolving into a 'risk management platform.' Amid growing structural uncertainty, the ability to utilize data, operate with a customer-centric approach, and connect with external ecosystems is expected to become the new sources of competitiveness for insurance companies.

On May 14, Samil PricewaterhouseCoopers (Samil PwC) published a report titled 'Next in Insurance 2030,' presenting these insights. The report diagnoses changes in the insurance industry landscape and offers implications for strengthening insurers' response capabilities.

The report forecasts that these recent changes will not be short-term shocks. It analyzes that the structural transformation of the industry is accelerating due to several factors: the normalization of complex uncertainties; technological innovation; the restructuring of insurance touchpoints and sales structures; and the intensification of environmental and social risks.

In particular, the rise of new risks such as climate disasters, cyberattacks, and health-related risks is creating an environment where it is difficult to respond using only existing insurance models. This affects every aspect of insurers' business, including their revenue structures, operational methods, and underwriting decisions.

Four Stages of the Insurance Company's Transformation Model. Samil PricewaterhouseCoopers

The report categorizes the transformation model of insurers into four stages. The first stage, 'Incremental Change,' maintains existing business despite external changes, resulting in only limited and reactive improvements. While this can secure short-term stability, there are clear limitations to achieving competitiveness in an environment of ongoing uncertainty.

The second stage, 'Technology and Data-Driven Innovation,' involves enhancing operational efficiency and customer experience through the use of cloud computing, artificial intelligence (AI), and data analytics. This stage, which many insurers currently adopt or aim to reach, centers on designing customized products based on customer data and refining risk management as core competitive factors. However, the report points out that it is difficult for this stage to lead to a fundamental structural transformation, which is a key limitation.

The third stage, 'Embedding Customer-Centric Models,' represents a structural transformation where all aspects of the business—including product design, service delivery, risk management, and organizational operations—are reorganized around the customer. A notable feature is the integration of protection and services based on the customer life cycle. The relationship with customers also extends beyond individual contracts to a long-term and integrated management structure.

The final stage, 'Redefining Insurance Value,' expands the role of insurance from post-incident compensation to proactive prevention and risk mitigation support. The report predicts that, in the long term, insurance will move beyond independent products and become integrated into various industry and service contexts. In particular, it foresees the expansion of 'embedded insurance,' where insurance is combined with non-financial services. The report also adds that there is a high likelihood that insurance will evolve to connect with risk management systems at the ecosystem level through partnerships with external parties.

The report suggests six strategic directions for insurers: transitioning to customer-centric operations; strengthening core functions based on data and AI; expanding connections with external ecosystems; refining risk detection and management systems; reorganizing around organizational and technological foundations; and ensuring consistent investment and execution led by top management.

The report emphasizes that, going forward, the basis for competition among insurers will shift from products and pricing to competencies such as data interpretation, customer understanding and personalization, ecosystem integration, and prevention-focused service design. However, it also notes, "Currently, many insurers still remain at the technology and data-driven efficiency stage, so it will take time to achieve a fundamental transformation."

The transformation of the insurance industry is expected to reduce premium burdens and provide customized coverage for customers, while bringing improvements in loss ratios and profitability for insurers. At the same time, insurers are anticipated to play an important role in building social risk management systems through collaboration with both public and private sectors.

Jin Bongjae, Insurance Industry Leader (Partner) at Samil PricewaterhouseCoopers, stated, "The insurance industry now faces the need to restructure not just through simple digitalization, but by reconfiguring all customer touchpoints, risk management processes, and product structures. Advancing a total customer-centric operational system based on data and AI, along with sustained investment and execution by management, will determine the future competitiveness of insurers."

This content was produced with the assistance of AI translation services.