The insurance industry remains resilient, is continuing to generate growth around the world and maintaining overall profitability despite turbulence in the global economy, a new study by Deloitte says.

As insurers adapt to maturing markets and economic turbulence, the ability to integrate technology and business-model innovation into legacy environments may be the key to future success, Deloitte’s 2020 insurance outlook says.

Nonlife premiums were up 3% in real terms last year, above the 10-year average of around 2%, and close to 3% growth is expected again for 2019 and 2020, the report says.

Still, nonlife premiums in advanced markets are only expected to rise 1.8% through 2020, compared to 7% in emerging markets.

The hardening property & casualty (P&C) market is a worldwide phenomenon, with increases in all major geographic regions for the third straight quarter, led by the Pacific region at 18%, versus 6% in the UK and 5% in the US, with continental Europe trailing at only 2%.

“P&C insurers around the world are indeed growing premium volume simply by raising rates, in part to compensate for mounting liability and catastrophe losses as well as lower yields on fixed-income securities,” the report says.

Increases were most prominent in financial and professional liability (nearly 10%), driven in part by higher directors’ & officers’ losses due to escalating securities and derivatives suits.

Property coverage also saw significant increases of 8%, given higher disaster losses over the last few years.

On the life insurance and annuity (L&A) side of the business, global premiums are forecast to rise 2.9% in each of the next two years, compared with a 0.6% annual average over the last decade. Emerging market life insurance premiums are forecast to rise by a robust 8.7%.

China is expected to contribute almost half of the increase in global life premiums over the next two years, with a rebound to 11% growth after a sharp 5.4% contraction in 2018 due to tightening of regulations.

Deloitte says the insurance industry is displaying an increasing sense of urgency toward innovation, with many insurers “beginning to focus on longer-term responses to avoid irrelevance”.

Many are “overly focused” on enhancing legacy systems, products and business models, while neglecting to devote enough resources to more disruptive innovations that might differentiate them in an increasingly customer-centric economy.

“Improved technology alone will not likely foster sustainable innovation unless accompanied by fundamental changes in insurance company strategy, operating models and culture, with an emphasis on enhancing their talent base.”

The report says only 4% of millennials are interested in working for the insurance industry, an obstacle in attracting new talent. It says integrating highly skilled people is a challenge “akin to the potential for tissue rejection in a transplant”.

“Will legacy personnel wedded to the way insurers have historically conducted business accept the different attitudes, approaches, and ideas of newcomers, and work together to create the insurer of the future?

“Despite all the talk and emphasis on emerging technologies, insurance remains a people business, both in terms of how it is sold and bought, as well as how insurers are managed.”

Resolving this emerging ‘synthesis challenge’ of how to integrate new tools, technologies, and techniques and recruits with time-honoured status quo practices may be the biggest factor for insurer success in the decade ahead, Deloitte says.