This is the final post in a four-part series about Accenture’s most recent Insurance Equity Analyst Survey. The first three included an overview and discussion on what analysts believe should be the priorities of high-performing insurers: risk control and sustainable growth. It’s no surprise that their third priority is cost reduction, with an emphasis on operational efficiency.
Q: What should be the most important priority for insurers in the year ahead?
Piecemeal efforts to cut costs are unlikely to have much of an impact, as most firms have already trimmed most of their fat. What is needed is a thorough review of the cost structure. And most of the potential for permanently changing the cost structure can be found in old, inefficient operating models.
Operational improvements reduce costs
Portfolio rationalization, for example, is a major opportunity to reduce costs, as is improving business processes, and removing the unnecessary complexity of business and product silos. Also, by balancing lower-cost distribution channels with traditional channels, insurers can discover new cost efficiencies.
Insurers must also look at the cost to market new products, opportunities to use the advantages of scale, such as concentrating operations on a few markets or in a few geographies, and more modern technologies to simplify administration platforms and embrace analytics, digital marketing, mobility and social media.
For P&C carriers, claims transformation offers significant benefits: better claims outcomes, more precise loss reserving, more efficient claims procurement management, less fraud, and a lower unit cost per claim.