Last week, I introduced the first two considerations for insurers considering an emerging market entry strategy. This week, I’ll reveal two more that can improve the odds of success.
How will you build a profitable position?
Having decided where and how to enter an emerging market, insurers must determine how they’ll create a competitive position that meets long-term business goals.
Specifically, insurers should be able to answer three questions:
- Who are our competitors and how will we win in the market?
- Which customers will we go after, how do they buy, and why will they choose us over others?
- How should we configure our local operations to deliver the capabilities we need as efficiently as possible?
How will emerging market activities fit into your global business model?
Emerging markets often require different approaches, processes and governance—and each new market can add significant complexity to an insurer’s global operating model. Participating in emerging markets can also impact risk management. Furthermore, insurers should prepare for increased susceptibility to impact from inflation, commodity prices and political unrest.
Insurers can mitigate these challenges with proper risk management processes, currency hedges and contingency plans. It’s also important to strike a balance between customizing local processes and investing in global back-office functions or shared services.
Emerging markets will only continue to be opportunities for expansion, innovation and competition. Insurers seeking to drive growth and enter emerging markets need a strategy designed for the target market—one that offers the flexibility to adjust to market transitions and the ability to position for long-term success.
To learn more, download Emerging Market Entry: Keys to Success.