Global Insurance Industry Outlook - Mid-year update: 2008Issues on the horizon |
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Although the insurance industry has enjoyed strong business conditions over the last few years, the worsening economic outlook will likely pose considerable challenges in the year ahead. These challenges will be especially pronounced in the property and casualty segment, where growing pricing pressure as the market softens will drive a need for cost-cutting and greater efficiency.
Insurance is a mature industry, and driving profitable top-line growth will be difficult. Insurers are also facing increased competition from global players and companies from other industries. However, there are significant growth opportunities in the industry. For example, the wave of retiring baby boomers is creating a potentially huge market for new products that help consumers protect income and manage risk. At the same time, advancing technology is making it possible to develop deeper insights into consumers, products, product packages and distribution partners, and is also helping create new channels for reaching customers.
To take advantage of these opportunities, insurance companies will need to review their operating and marketing strategies, and be willing to drive fundamental changes in the way they work. Insurers that innovate have the opportunity to move ahead of their competitors by better meeting evolving customer needs. Companies will need to manage relationships with an expanded array of distribution partners to ensure they deliver a high-quality, consistent experience to customers. They will have to become more efficient and operate in an increasingly integrated fashion. And as they make these changes, they will need to factor in the realities of a tightening labor market.
The challenges and opportunities over the next year are considerable. Here are the key issues that we believe industry executives need to confront in the year ahead:
- The quest for growth.
Insurers will have to look beyond traditional approaches to drive growth. - The power of advanced analytics.
The industry is no stranger to advanced analytics, having used these tools in underwriting and investment management for some time. - Driving operational excellence.
With weaker economic conditions, cost-reduction will be high on the agenda. - Rethinking talent strategies.
The war for talent continues, and companies will need to tap into a new generation of employees — one that brings new expectations and values to the workplace and that may not see insurance as an attractive career. - Regulation and risk: Raising the bar.
Regulators and rating agencies are increasing their scrutiny on risk management in the industry, bringing Enterprise Risk Management (ERM) increasingly to the fore.
About the report
The 2008 Global Industry Outlooks offer an analysis and perspective on the key issues facing the financial services industry today. As the business world continues to change dramatically, financial services companies are faced with similar, but evolving issues. To position themselves for success, companies must study the trends impacting their industry and shape their strategies around them.
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Global Insurance Industry Outlook 2008
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