Insurers are shifting attention from cost reduction to strategy and capitalizing on new opportunities. To analyze this trend, Accenture spoke with 60 leading carriers around the world. The result: Accenture’s High Performance Insurer study. Over the next six weeks, I will discuss parts of it in detail.
We identified 15 key business metrics and assessed our 60 leading carriers against these criteria. We also looked at their performance across the entire business cycle. From this, we identified the high performers and analyzed their results. We uncovered challenges that insurers face as they prepare for the upturn, and five key attributes that allow insurers to address these challenges and achieve high performance.
Challenges facing insurers
Accenture’s High Performance Insurer study found that there are five key challenges in the new landscape.
- Tougher economics. Pressures of rising costs, diminished returns and the need to replenish lost capital have created a new market with new rules.
- More demanding customers. Customer loyalty to insurance companies is low, and the expectation for service and value is high.
- Evolving technologies. Technology is emerging at a rapid pace, forcing insurers to look at how they use technology to engage customers, store data and use analytics.
- Altered global market structure. With the push toward having growth at home and in emerging markets, insurers must navigate a new international economy with new leaders.
- Competitive forces. As demand in local markets starts to revive, opportunities for growth will emerge. Insurers must be prepared to capitalize on these opportunities.
Attributes of high performance insurers
With these challenges in mind, what are the key attributes of insurers who are best positioned for success?
- Effective customer-centric distribution. Effective customer recruitment and retention depends on sophisticated use of data and being able to create the right products and marketing plans.
- Responsiveness to the market. The ability to identify opportunities and risks—quickly—and act decisively is a key attribute.
- Consistent operational excellence. Insurers with standard processes are faster to market and have shorter business cycle times.
- Relentless pursuit of cost reduction. Successful insurers cut costs strategically, by transforming their overall cost structure.
- Active risk management. Managing risk across the entire business—underwriting risk, investment exposure risk, financial risk, enterprise risk—is required for long-term success.
Over the next five weeks, I will discuss these challenges and attributes in more detail. Next week, I’ll discuss the first two challenges facing insurers: tougher economics and more demanding customers.