“Be big or get out,” Walter Jopp, Zurich Middle East chief executive and keynote at International Adviser’s Fund Links Forum 2019, told the international life insurance and asset management industries.
Brexit, the US-China trade war, low returns and market volatility are just some of the issues that have plagued the financial services industry over the course of 2019.
These challenges have left many wondering what the sector can do to power through these difficult times.
But Jopp believes the current disruptive climate has a bright side, namely, opportunities the sector can embrace to evolve.
Think of the clients
He said the industry has lost some of its entrepreneurial spirit over the last decade, and it’s time for it to make a comeback.
“We are going to have to be bold.”
While the cost of implementing regulatory developments is affecting those in the sector, Jopp firmly believes that focusing on clients is the way forward, as their current experience “is painful, difficult and not what they want”.
“We need to embrace technology and give the customers what they want.
“The regulators feel that maybe the industry hasn’t been as good as it should’ve been at providing customer outcomes.”
Jopp think that is because “we [the international life sector] have got lost in the industry”.
Collective effort
That is why Jopp encouraged senior decision-makers at IA’s Fund Links Forum to engage with smaller firms, particularly when it comes to technology.
“Small companies are agile and the greatest opportunity for us is to partner up with them,” he said.
These firms have found a niche in the market, with Jopp citing businesses such as Lemonade and Ping An, that can complement international life insurers’ offerings and services.
But all this has to come back to the customer; the sector has to build products that customers want to buy, Jopp emphasised.
And that, of course, comes at a cost: “Value is important but it’s not cheap.”
Future sustainability
He added: “The margins in the international life business for insurance companies have been very, very high.
“We, as businesses, have to get used to that we are now moving into a mature level and some of those margins will not be sustainable in the future.
“And that’s where technology comes in. We can take some of the costs out, if we have less margins, if we provide better value to the customers, everybody will be happy.”
While the sector is “in the middle of a storm”, Jopp believes that getting back on its feet will depend on how willing the industry is to embrace the current turmoil and benefit from it, rather than cave in.
