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INSURANCE| 14.04.2021

Insurance depends on recovery and is leveraged on digitization and sustainable transformation 

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KPMG and CEOE recently presented a report on transformation and digitization that emphasizes the challenges that companies face in their hope to leave uncertainty behind and in turn take a leap toward competitiveness: Digital transformation, employee training and sustainability… All areas that MAPFRE has been working on for years through the Digital Challenge strategic initiative.

The expectations, strategies and risks of Spanish companies were analyzed in the latest report on Spain’s outlook, Perspectivas España 2021, prepared jointly by the consultancy KPMG and the CEOE (Confederación Española de Organizaciones Empresariales — Spanish Confederation of Business Organizations).

Following consultation with managers and entrepreneurs, the report shows that the 2020 overview leaves a bittersweet taste that highlights the “uneven impact of the pandemic on various sectors and the definitive transition toward a new competitive reality,” as Hilario Albarracín, former Chairman of KPMG in Spain, pointed out.

Almost half believe that the situation is “sensitive” and that “we will live with COVID-19 for up to 12 more months.” However, levers for recovery, like digitization and sustainable transformation, have been activated and are prominently featured in the strategic plans of companies, such as MAPFRE.

In the chapter on challenges, in addition to digital transformation, the people management and adapting to changes in consumption habits are highlighted.

 

Insurance: Society’s safety net

The report states that the outlook for economic developments in these 12 months is significantly more optimistic, with almost four out of ten companies confident that the situation will improve. Based on the valuation by sectors, over 90 percent believe the insurance industry is good or stable, and 61 percent believe that revenue will grow or remain stable (13 percent). The sectors that will recover last are tourism and transport—which are particularly impacted by restrictions on movement—as well as the automotive sector.

Over 30 percent believe that insurance is also among those whose company investment will increase in 2021, or at least remain stable (57 percent). 30 percent consider that the workforce could grow this year, and 57 percent believe it will remain stable.

The President of the Spanish Association of Insurance and Reinsurance, Pilar González de Frutos, defined the industry as society’s “safety net” in an interview included in the report. She called for neutral legislation that encourages “innovation and digitization” in order to remain competitive and be able to adapt to clients’ expectations.

The report emphasizes that companies’ progress in digital transformation depends heavily on the ability of employees to update their knowledge and skills. Workers in Insurance and Business Services (with a score of 7), together with those in Technology, had the highest rating.

As early as 2018, MAPFRE launched the Digital Challenge to manage the organization’s shift toward a working environment adapted to the digital age by gaining flexibility and agility through collaborative work, knowledge sharing, digital culture and using new forms of remuneration and recognition. At the beginning of 2020, the company changed the challenge (Digital Challenge II) to continue managing change by adopting new capabilities, more dynamic and flexible structures, and customizing the employees’ experiences.

This strategic initiative proved to be a key part of the transformation, enabling the more than 34,000 MAPFRE employees to work from home during the pandemic, having developed new ways of working in digital and collaborative environments. The undertaking has been a success and resulted in #MAPFREMoreUnitedThanEver.

 

[1] Infographic based on information highlighted in the integrated report

 

A decisive 2021 

European funds have been made available to help us with the task ahead of us as a country. “It is crucial that they are used with a vision of the present, but also of the future,” stated Antonio Garamendi, Chairman of CEOE. Spain may receive up to 140 billion euros from Europe (under the Next Generation EU plan), of which 72 billion euros will be in direct aid, used to transform its production systems in order to make it more resilient, digital and sustainable.

At present, 73 percent of respondents across the group of companies analyzed believe that the current economic situation is bad or very bad. Almost half consider their organization’s situation to be “sensitive,” and this is the same proportion of companies that have adjusted their workforce.

Nevertheless, 2021 looks set to be the year of the beginning of recovery, with more than 60 percent expecting revenues to improve. Thirty-five percent believe that pre-pandemic levels will not recover until 2022 and 31 percent believe they will not recover until 2023. For Central Bank of Spain Governor Pablo Hernández de Cos, the outcome “will depend on the magnitude and duration of the crisis, and the effectiveness of the measures.”

Almost 7 out of 10 agree that digitization is the main challenge. Companies’ investment plans in this regard are focused on technology tools (with Big Data and clouds at the forefront), as well as cybersecurity.