In my previous post I talked about how low interest rates, new regulatory initiatives, changing customer behaviors and other factors are forcing life insurers to re-think their approach to the market.
In facing these challenges, I think insurers need to focus on three key areas:
- Reducing general expenses.
- Optimizing commissions.
- Growing top-line premiums.
Our research shows that by addressing these areas, insurers can expect to see a sustained shift in their cost curves and a 13 percent ROE.
To improve performance in these three key areas, insurers can leverage a set of value drivers:
- Transforming the operating model and organization.
- Implementing an IT transformation.
- Improving sales and service.
- Enhancing sourcing and procurement.
- Optimizing compensation spending.
- Reducing overpayments.
- Reducing operations costs.
But prioritizing improvements to core activities is just one part of the solution. In my next post I’ll talk about the importance of also transforming the customer experience.
To learn more in the meantime, download: Getting to 2020: Strategies for Profitable Growth.