Like Dickens’ Ghost of Christmas Yet to Come showing the future to Scrooge, insurers are being warned by EY about what could happen to them if they don’t embrace change.

These bleak scenarios show the consequences of insurers being left behind as powerful trends and forces reshape the industry’s future.

EY’s report includes eight scenarios where it contrasts the positive experience of potential leaders and the dismal fate awaiting laggards.

Laggards that dismiss driverless vehicle technologies as immature will put their long-term survival in jeopardy as traditional vehicles decline and car ownership goes the way of the horse-drawn carriage.

When it comes to cyber risk, they will miss the boat on helping customers and may fail to patch vulnerabilities in their own systems. In the worst-case scenario a catastrophic incident could bankrupt an insurance company.

They will ignore the chance to connect with insurtechs and other partners while clinging to the view that they can, or should, do everything themselves, or that the cloud is too risky a place to do business.

“Laggards will be those firms that can’t find a niche, don’t open themselves up to the broader capabilities of the ecosystem, or miss out on the right alliances,” EY says.

They will fail to anticipate consumer needs related to life events and lifestyles and will miss opportunities from collaborating with tech giants, whose long-anticipated entry into the market seems inevitable.

“Laggards, regional carriers and weak brands won’t be very attractive to tech giants, who will expect their partners to be nimble and have niche process expertise, national reach, brand recognition and specialised technology,” it says.

With artificial intelligence, those avoiding the future won’t make required investments or be able to make the leap, leaving them stuck with inefficient manual processes and a competitive disadvantage.

When it comes to the present state of play, the report also provides a sobering perspective and a warning, highlighting that the marketplace is hyper-competitive with extremely tight margins, slow, if any growth, and high operating costs.

“The numbers must get better,” it says. “The industry’s current economics are unsustainable.”

On the positive side, EY says now is the time to develop strategic and tactical plans to capitalise on the changing trends and disruptive technology advancements and to secure a brighter future.

As opposed to the laggards, the winners will drive transformation through a clear purpose and mission resonating with employees and consumers, while customer experiences should be as good as or better compared with those offered by digital leaders in other industries.

Use of digitisation, automation and artificial intelligence will be key in reducing costs and data and analytics will improve insights and outcomes. The report also envisages success will lie in “the right mix of digital innovation and the human touch”.

Insurers are urged to find ways to engage younger consumers sooner and look for more creative alternatives for providing cover as the market evolves.

It notes the potential to better protect underinsured consumers and business around the world, with companies operating in emerging markets already creatively using smartphones to provide micro-insurance and other products.

Coming to grips with changes highlighted in the report is presented not just as important for the performance of insurers themselves, but also a requirement for the wider social good.

“Insurers have a critical role to play in helping society prepare for and protect against the threats presented by climate change, cyber crime, disruptive technologies, demographic shifts and social unrest,” it says.

The eight market scenarios are based on likely developments over the next five to 10 years but they are already starting to influence executive and board decisions. EY says soon they will become operational realities and represent a “new normal” across the industry.

The report, “NextWave Insurance: personal lines and small commercial. How insurers must change in a fast-moving world”, was developed following workshops and aims to encourage organisations to map out a road to a profitable future.

“Every insurance company in the region, including those in Australia, will be feeling the effects of these disruptive scenarios playing out in their market,” EY Asia-Pacific Insurance Sector leader Grant Peters says.

“Insurers should ask themselves if their business model is ready, if they’re moving fast enough to outpace their competitors, and if they have done enough to mitigate the risks.”

If not, a dismal future may be on the cards.