Look for significant changes affecting the insurance industry in2017  some will bring opportunities and others afew headaches.

In its "2017U.S. Property-Casualty Outlook," a survey of insurance chiefrisk officers, Ernst & Young highlights some of the factorsthat will have the greatest impact, such as the estimated 70,000people who are expected to retire, the Trump administration and itseffect on the economy, and the changing regulatory landscape.

A change in administration

The victory by President-elect Donald Trump has created someuncertainty in the markets.

According to the Ernst & Young outlook, only a moderate 2.1percent economic growth had been forecast, but now some analystsbelieve that his intention to cut taxes and increase infrastructurespending could have an even more positive impact, helping toincrease growth and long-term interest rates. However, others areconcerned that Trump's proposed policies could have the oppositeeffect, especially when it comes to trade.

Large institutions such as the Bank of America have cut theirgrowth outlooks for 2017. Bank of America reduced its from 2.1percent to 1.8 percent, and Munich Re predicts a decline in premiumgrowth from 4 percent to 1.5 percent.

The insurance industry has also experienced a significantdecline in its net investment income, which dropped from $31.6billion in early 2015 to $26.5 billion in the first half of 2016.The outlook for 2017 is not expected to be any better.

The change in leadership in the White House, Senate and House isalso expected to lead to regulatory changes at the state, federaland international levels. Some of the issues which could beaffected include the National Flood Insurance Program,cybersecurity regulations and even the use of autonomousvehicles.

Auto insurers are expected to raise premiums for personal andcommercial auto policyholders as the frequency and severity ofclaims and repair costs continue to increase. With gasoline pricesexpected to remain lower, the increase in the number of milesdriven will continue to rise. While new auto technology andtelematics are expected to eventually reduce the number and size ofclaims, when that will actually occur is uncertain.

Technology and cyber challenges

As technology continues to change customer expectations, Ernst& Young says that insurers will increase their efforts in 2017to become more innovative. A number of companies are partneringwith InsurTech startups and others to blend these new technologieswith their existing operations to provide the service and accesscustomers demand for today.

New products and coverage options, as well as the ability toprovide on-demand coverage will disrupt the traditional insurancelandscape. Ernst & Young cites the example of insurancetechnology start-up Trov, which will be rolling out on-demandinsurance in 2017, allowing policyholders to activate and turn offcoverage for their personal belongings as needed via theircellphones.

The report says that other technologies such as artificialintelligence, telematics, the Internet of Things and blockchainwill also have key roles in insurance, forcing insurers to rethinkwhat they offer and how it is provided to policyholders.

These changes could also affect mergers and acquisitions in themarket. "Weak organic growth, profitability pressures and favorablemarket multiples will make conditions ripe for consolidation in2017," said Thomas Holzheu, the Americas chief economist for SwissRe Sigma.

Cybersecurity will also continue to be an issue in 2017,especially because attacks are expected to increase. According toErnst & Young, the property and casualty cyber sector is worthwell over $3.25 billion and has more than 60 carriers offeringcoverage products. The greatest growth opportunities may be in thesmall-business sector, where a significant number of companies havebeen affected, but still do not have insurance or substantialcybersecurity plans in place.

Related: President-elect Trump likely to back broadinsurance goals

The changing workforce will also mean new approaches tohandling an ever-increasing workload while managing customerexpectations. (Photo: iStock)

The talent gap will widen

Filling the vacant seats left by retiring professionals istaking on a new urgency for insurers, which are accelerating theirefforts to hire millennials and others to handle the gap left bymore than 70,000 retirees in 2017.

Technology will be able to offset some of the loss, but manyinsurers will need to create innovations to attract new workers andmeet their customers' needs. "Insurers now have the opportunity tointroduce new technology, such as robotics, and more effectiveworkforce management activities," said David Hollander, Americasinsurance leader for Ernst & Young.

According to the survey, the challenges facing insurers can besuccessfully addressed in four ways by:

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   1. Focusing on new products and business models while stilladdressing customers' needs and expectations.
   2. Using technology to help automate key processes, systematicallyapplying advanced analytics enterprise-wide, and investing in keytechnologies to position companies for the future.
   3. Anticipating the growing cyber risk from hackers and takingsteps to identify and mitigate their activities.
   4. Rethinking how companies attract and retain their workforce,including a clear understanding of how millennials view insuranceand the opportunities it provides.

With customer demands continuing to increase, collaboration andinnovation will be critical components to insurers' success. And anindustry not traditionally known for its use of technology andchange may find both of these items on its list of New Year'sresolutions in 2017.