FORECAST 2025: Business Disruptors
FORECAST 2025: Business Disruptors
Author
Jennifer Rankin
Contributing Editor
LIMRA and LOMA
January 2025
What do you think has the greatest potential to disrupt business-as-usual at your company? We asked FORECAST 2025 participants just that, and their answers ranged from heightened regulation to geopolitical turmoil.
One important disruptor is cybercrime/fraud.
“Cybersecurity events have arguably the highest potential for disruption,” says Adrian Griggs, EVP & Chief Operating Officer, Pacific Life, “although we feel we are managing the risk well. Otherwise, we don’t see any other trends as being near-term disruptive.”
“Cyberattacks remain a concern not just for us, but for our entire industry, prompting insurance companies to enhance data protection measures to safeguard customer privacy and minimize business disruptions,” says Wade Harrison, EVP & Chief Retail Officer, Protective Life.
Bob Jurgensmeier, Chief Executive Officer, Ameritas Life Insurance Group, adds, “We continue raising the bar in cybersecurity and expect we’ll never be finished investing in technology aimed at fraud detection and prevention.”
Geopolitical turmoil also has the potential to disrupt the insurance industry.
“With increased global tensions, the impact of geopolitical turmoil grows, introducing the risk of supply chain disruption, increased inflation and general financial instability,” says Marc Giguère, President & Chief Executive Officer, Munich Re, U.S. Life and Health. “As a global reinsurer, we are most effective and efficient when there are stable working relations between countries.”
“There are definitely concerns about the geopolitical volatility around the world and its far-reaching effects,” says Mike James, EVP & Chief Sales Officer, NFP, an Aon company. “Now that NFP is part of Aon, we are truly a global company, able to meet multinational organizations — including law firms, private equity firms and sports and entertainment companies — where they are, no matter where they do business. This means we need to be even more attuned to geopolitics and what it means for our clients. Uncertainty can fuel inaction, and that’s not good as we continue to encourage our clients to plan and be proactive in overcoming challenges.”
More Disruptors
A third disruptor is the legislative climate, as increased or more stringent regulation always has the potential to pose challenges to the financial services/insurance industry.
“Near term,” says Sarah Mineau, SVP, Life/Health & Investment Planning Services, State Farm Insurance, “the evolving regulatory and legislative environment at the federal and state level has the ability to greatly impact our business. This includes potential upcoming issues such as tax changes and additional oversight — from the Department of Labor (DOL), Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA), for example — that could impact how we do business and ultimately impact the customer.”
“Regulators don’t always seem to operate with the goal of getting more people insured,” notes Giguère, “and certain regulatory action can sometimes make it harder for the industry to serve customers the way they want to be served. Ineffective regulations can also make reinsurance more expensive.”
“Although unlikely, regulatory changes around reinsurance and/or the definition of fiduciary — from the Department of Labor (DOL), for example — could affect capital management and risk management strategies, investment criteria, and potentially compensation models,” adds Jasmine Jirele, President & Chief Executive Officer, Allianz Life Insurance Company of North America.
The regulation of private consumer data also affects the insurance industry. While protecting consumer data is sacrosanct across industries, limiting access to it can hamper the effectiveness of insurance companies.
“As a provider of mortality/morbidity/longevity reinsurance,” says Giguère, “we rely on detailed analysis of health data. We recognize that this is very sensitive information and that it is our responsibility to keep data safe and secure. If legislation limits our access to this data, it could hamper our ability to properly assess these risks.”
Another disruptor is private-equity-driven mergers and acquisitions.
“Mergers and acquisitions driven by private equity ownership continue to fuel strong activity and competitive retail markets, with private equity firms playing a significant role in transactions,” notes Harrison. “We remain open to conversations with any party — including private equity firms — that could lead to new deals. Although opportunities in traditional spaces are limited, we anticipate that macro events will continue to shape and influence the landscape. This dynamic environment requires us to stay agile and responsive to emerging opportunities and challenges.”
“As opposed to choosing one disruptor,” says Kamilah Williams-Kemp, EVP & Chief Product Officer, Northwestern Mutual, “I believe it’s the pace and scale of all disruptions that present the greatest challenge. There are a growing number of disruptors that organizations must assess and act upon in order to ensure their growth, relevance and competitiveness in the marketplace. But done well, organizations throughout our industry can convert these challenges into opportunities and serve our clients, employees, advisors and teams even better than before. At Northwestern Mutual, it’s a responsibility that we take seriously.”
Aaron Ball, EVP & Co-Head of the Foundational Business, New York Life, believes that being content with the status quo is just as potent a disruptor as any of the above. “One of the greatest threats to our business,” he says “is not evolving to meet the changing expectations of our agents and consumers — that is, being content with the status quo. New York Life has had tremendous success. With that said, we can’t rest on our laurels and assume future success is a given. Our market and the world are changing, as are the expectations of our clients and future talent. We must continue to transform and modernize our organization to remain an industry leader.”
Positive Perspectives
While the word “disruption” typically has a negative connotation, a few FORECAST 2025 participants point out that disruption sometimes has an upside.
“I believe that technology will continue to be a positive disruptive force in our industry,” says Jirele. “The next generation of consumers will enter their retirement planning phase with high expectations with regard to technology as it relates to transactions, a holistic view of their finances and the ability to use technology to have more control over their financial lives. At the same time, technologies like artificial intelligence (AI) have the potential to create significant changes to areas like underwriting and actuarial science. Successful companies will be the ones that embrace continuous technological advancement, and who have the courage and vision to ‘go big’ on innovation.”
Mineau agrees that technology, especially AI, can be a positive disruptor if you are prepared to invest the time and money.
“Longer term, the impact of AI on both our workforce and our business is top of mind for State Farm senior leaders. Automation has tremendous potential; however, upskilling talent to be in a position to manage the unique opportunities and risks associated with AI is a significant investment and an effort that will need to be carefully orchestrated to ensure that our high standards of quality and service are not impacted in ways we don’t expect.”
Winning Countermoves
Among the ways FORECAST 2025 participants are preparing for disruption are modeling various economic scenarios, embracing agility and nimbleness, and creating strong risk management programs.
“We’re still in a volatile macro environment,” says Chris Blunt, Chief Executive Officer, F&G, “so it’s important to be prepared for different scenarios. Take interest rates, for example. Our industry is somewhat insulated as we’re pretty tightly asset-and-liability matched to interest rate moves, but it does impact the margins. Also be prepared to stay nimble given the differences in the environment, including the regulatory environment, which continues to be complex. For example, it’s not just the 50 state regulators, but there are also federal and offshore, which makes for an ongoing challenge to navigate.”
“Numerous threats have the potential to disrupt business-as-usual at any organization; however, at Protective, we maintain a culture of continuous improvement and aspiring for better,” says Harrison. “This means we leverage our strong foundation and do everything we can to proactively prepare.”
“Across our strategy and planning activities we do comprehensive scenario planning and develop playbooks that help us quickly respond to market and economic changes,” says Jirele.
“Aflac has a strong risk management discipline to ensure we are constantly monitoring potential risks and building mitigations where appropriate,” says Virgil Miller, President, Aflac U.S., Aflac. “We are hyperfocused on the potential impacts of data/privacy/fraud but have a strong CISO (Chief Information Security Officer) leader and robust cybersecurity program to ensure we protect the company, our customers and our shareholders.”
As you can see, disruptive forces — some positive, some negative — abound in the financial services/insurance industry. The good news? Insurance companies are prepared to face them all.
