The insurance industry has remained much the same for more than100 years, but the status quo cannot endure nor lead to growth ofan organization.

Commercial insurers face tough times ahead withunderwriting margins that are pressured by softening prices and apotentially volatile interest rate environment. What are the keysto success? Better capabilities, service, customer-focus andproducts — all of which require on-going investment incapabilities.

As we look to 2017, it's important to consider the biggestdrivers of change to ensure a boost in your bottom line:

• Customer expectations: Customers expectconvenience and transparency and have greater ability to find itthan ever before.
• Pace of innovation: Customers have a need fornew insurance solutions, but incumbents are struggling to provideappropriate products and services.
• Startups: New players that have the ability toinnovate quickly are taking advantage of the opportunity to fillthe gaps that incumbents have not.

Although the industry has seen generally strong underwritingresults in recent years, this could change — potentially verysoon. 

Related: 5 steps to building and sustaining a culture ofinnovation

The following top seven insurance industry issues should beclosely monitored as you head into planning for 2017, creating anenvironment that is adaptive to change and positioned forgrowth:

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1. The rise of insurance technology

There are several business challenges that established insurersare facing as they try to meet new customer needs while improvingcore insurance functions. A specific focus on insurance technology, or "InsurTech," hasemerged to help insurers solve these challenges.

Explore ways to leverage and incorporate technology into yourgrowth strategy to discover emerging coverage needs andrisks that require new insurance products and services.

Related: 3 key technology trends for the insurance industryin 2016

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2. Artificial intelligence

The initial impact of artificial intelligence (AI)primarily relates to improving efficiencies and automating existingcustomer-facing, underwriting and claims processes. Over time, itsimpact will be more profound; it will identify, assess andunderwrite emerging risks and identify new revenue sources.

Organizations should consider taking specific steps toincorporate AI techniques within a broader data science group, suchas building a pilot of your AI process using existing vendor toolsor open source tools.

Related: 5 areas where independent agencies are fallingshort on digital processes

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3. Cyber insurance

Cyber is a potentially huge but still largely untappedopportunity for insurers and reinsurers. It's estimated that annualgross written premiums will increase from around $2.5 billion todayto $7.5 billion by the end of the decade. However, wariness ofcyber risk is widespread. Many insurers don't want to cover it atall, others have set limits below the levels their clients seek,and some have imposed restrictive exclusions and conditions.

There are several ways insurers, reinsurers and brokers couldput cyber insurance on a more sustainable footing and takeadvantage of the opportunities for profitable growth, such assharing data more effectively.

Related: 6 categories of questions you'll be asked whenapplying for cyber coverage

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4. Aging workforce

The insurance industry is facing a looming crisis with a rapidlyaging workforce. According to the U.S. Bureau of Labor Statistics, the number ofinsurance professionals aged 55 years and older has increased 74percent in the last 10 years; by 2018, a quarter of insuranceindustry employees will be within five to 10 years ofretirement.

Most U.S. employers are woefully unprepared for the businessrealities of an aging workforce. Companies that effectivelyrecruit, train and develop dedicated future staff and leaders willdifferentiate themselves and set themselves up for success into thefuture.

 Related: 5 ways you can help recruit the next generation ofinsurance professionals

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5. Industry M&A activity

Inbound foreign investment — especially from Japan and China —is expected to continue fueling U.S. merger and acquisition(M&A) activity. Private equity will remain an important playerin the deals market, not least because it has expanded its targetsbeyond brokers to the industry as a whole. The need to eliminatecosts in order to grow the bottom line will remain a primaryeconomic driver of consolidation.

Related: Agency mergers and acquisitions continue to bestrong for first-half 2016

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6. Model risk management

One of the fastest growing concerns on insurers' enterprise riskagenda is model risk management, which has become a major focus ofregulators and the subject of intense activity and debate atinsurers. Generating measurable business value is model riskmanagement's next developmental stage.

Models are among insurers' greatest assets. Putting models andthe data that feeds them at the center of value creation canprovide new perspectives that better address customerexpectations.

Related: Are insurers prepared for Hurricane AndrewII?

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7. Insurance taxation

There are several proposed legislative changes that couldsignificantly impact the insurance industry as the U.S. leadershipendures change. Election-year politics are dominating legislativeaction this year as both parties lay down policy agendas for 2017and beyond. At the same time, President-elect Donald Trump and theRepublican-controlled Congress are expected to generate controversywith their tax proposals.

All companies — regardless of scale — need toensure that their capital and operating spend aligns with theirstrategy and capabilities and the ways they choose to differentiatethemselves in the market. Keeping a close eye on these evolvingindustry issues will aid to your organization's competitive edge.In this transformative time, the ones that can't or won't do thesewill fall increasingly behind the market leaders.

Related: Here are the 4 top post-election risk managementissues to watch

Jamie Yoder is the global insurance advisory leader forPricewaterhouseCoopers, and has more than 20 years of consultingexperience for leading U.S. and international companies in theinsurance and financial services sectors. He can be reachedat [email protected].