Insuring the Future of an Industry
Pressure on the insurance industry is coming from all directions. Insurance companies are finding themselves caught between conflicting forces, as demand slumps in mature markets and distribution challenges constrain growth in emerging markets. Meanwhile, the investment needed to combat these issues is threatened by low interest rates and volatile investment returns. And insured risks are becoming more complex and harder to control, subject to still-evolving regulatory requirements while costs are increasing for both claims settlement and servicing.
This perfect storm of industry challenges demands an immediate and comprehensive response from industry executives who must find new, creative ways to contain costs, accelerate time-to-market and improve product design and customer service. To succeed, insurers need to manage actuarial, financial, operational and IT risk in a holistic manner, and find synergies between them to help increase business agility and lower costs.
They also need to rebuild the broken trust between the insurance industry and its customer base. In fact, 90 percent of all insurance CEOs picked getting closer to the customer as their most important strategic initiative in the next five years.1 Today’s policyholders are very different than in the past; they are increasingly sophisticated in their knowledge of insurance products and want to do business through multiple channels, including social media. They also want more dynamic products that are easier to understand and personalize.
This is why the customer strategies of the past — endlessly swapping disloyal and dissatisfied customers by competing over rates alone — will not satisfy these savvy consumers and will not lead to sustainable retention or significant growth.