STATE OF THE INSURANCE MARKET IN EUROPE

An economic environment that allows insurers to continue their expansion in Europe

The economic environment is key in the development of the insurance market in Europe, through several factors:

• - Economic growth: this was relatively weak in 2016 with a GDP in Europe which increased by 1.9% (average of OECD countries). Nevertheless, according to analysts' forecasts, the trend remains upward for the coming years.
• - The rate of the euro against the dollar: remained rather stable in 2016, it experienced a discount in 2017 mainly due to Brexit. This event results in a relatively volatile market and with an economic and political vision still uncertain.
• - Inflation : it remains on average relatively stable in 2016 with + 0.9% and + 1.5% in 2017.
• - Interest rates: The ECB's policy favoring the preservation of historically low-interest rates weighs on insurers.

Key figures for the sector in Europe

Some explanations of the figures

The decrease in the penetration rate in Europe compared to 2015 is mainly due to a decrease in inflows on life insurance products and other capitalization products:

Major trends in the insurance sector in Europe

An undeniable evolution of the distribution network and the customer experience

In Europe, insurance products are most commonly sold through bancassurers and intermediaries (agents and brokers). The structure of the European market is very different from country to country, with insurers adjusting their different distribution channels according to the culture and needs of each population. However, a general trend emerges:

• - Main sales channel for life insurance products: bank insurers
• - Main sales channel for non-life products: intermediary networks

These distribution channels are undergoing rapid change. Several explanations for this:

• - Regulations such as DDA and PRIIPs demand more quality and transparency vis-à-vis consumers.
• - The behavior and expectations of customers, especially those of millennials, have evolved a lot about technological innovations, strongly pushing players to digitalize their customer journeys and move towards more omnichannel.

Massive investments are to be expected in new technologies such as artificial intelligence and robotization. The objectives are, on the one hand, to improve the user experience and automate exchanges, by accelerating processes/operations/transactions, and on the other hand to increase the profitability of insurance companies. Still, to improve customer relations and reduce costs, blockchain technology could soon have an impact as a new standard of exchange between customers and their insurance companies.

Towards more innovative products

While the insurance market in Europe is relatively saturated, insurance companies are trying to innovate. To design new products, they seek more and more to know their customers and their habits better, and to better control “data”, whether it is collected from the customer (direct customer behavior) or whether it comes from outside (example: weather condition sensors). Through data mining and predictive analysis techniques, they aim to improve customer relations but also to anticipate risks. As such, we are seeing a proliferation of offers around connected objects, the sale of which should accelerate with the imminent arrival of 5G in Europe.

Another trend observed is the growing demand for cyber insurance products. Businesses are increasingly opting for this type of coverage as they face an increase in cyber attacks. These products are still difficult to implement due to the lack of historical data on cyber-claims, the difficulty of correctly assessing the risks incurred and the potential losses, the absorption capacities of reinsurance, etc. The take-off of this The market will not belong in coming once the models have stabilized.

Besides, new products are appearing with the development of the collaborative economy and affinity insurance meeting consumers' needs for personalized coverage. We can cite the example of insurance for the loan of cars in the short term or insurance to cover personal items.