I have been discussing the results of the Accenture High Performance Insurer study. Last week, I discussed the first two challenges facing insurers today: tougher economics and more demanding customers. This week, I will discuss three more challenges facing insurers: evolving technologies, an altered global market structure and competitive forces.
Technology is evolving rapidly, with the emergence of mobile technology, cloud computing, analytics and the social web changing the way that everyone does business. This presents a particular challenge for an industry that has tended to be quite conservative in adopting new tools.
These innovations have been used by other industries (the retail industry, in particular) and have changed customer expectations for how businesses communicate. Further, insurers like Geico and Progressive have achieved market gains by including technological innovations as part of a multi-channel distribution strategy.
Along with the need to embrace technology is the requirement to upgrade legacy systems to take advantage of customer analytics and predictive modeling. Perhaps even more important is the emphasis on a workforce that can adapt to, use and implement these technologies.
Altered global market structure
Where some have fallen, new competitors have emerged. Eighty percent of the carriers that we surveyed believe that internationalization is critical or important to future performance. The trick is in developing and implementing a strategy to achieve this.
To have a sound strategy for internationalization, insurers must have a solid base at home, plus an understanding of the emerging market. This requires evaluation of the global operating model and a detailed understanding of local and global regulations.
As the new normal settles, opportunities for growth will begin to emerge. Insurers who are equipped to act quickly, decisively and strategically will be positioned well to capitalize on these opportunities. However, insurers who are still focused on strategies, systems and processes that impede agility will see their performance suffer accordingly. In the new normal, flexibility and agility are keys for success.
Clearly, these are serious challenges facing the insurance industry. However, these challenges are merely opportunities for insurers to develop key capabilities for success moving forward. In next week’s post, I will discuss some of the key attributes of successful insurers.
Download the Accenture High Performance Insurer study.
How do these challenges affect your business, and how do you deal with them? What are key attributes that help you address these challenges?