A challenging business environment requires insurance companies to rethink the fundamentals of their business. The combined impact of increased claims and benefit costs, deteriorating asset quality and low investment returns have battered insurance company balance sheets.
Responding to financial realities will require a return to basics in strategy and management approaches. The expansionist strategies of the 1990s, including the focus on global expansion, are now much more difficult to finance. Many companies are pulling out of foreign markets unless they have a dominant position. Lines of business that do not support a firm’s core business are being divested.
Firms need to reduce underwriting losses by exercising more discipline and using the latest technology tools to quantify risks more accurately. Automation and other cost-reduction initiatives have become a top priority. Meanwhile, legislative and regulatory developments create additional challenges. Regulatory bodies in the European Union are upgrading capital-adequacy standards. The movement to unify accounting standards and implement these standards for insurance products is gaining momentum.
Life insurance companies operating in the United States and many European and Asian countries are now required to implement anti-money-laundering programmes. New corporate governance responsibilities have either been approved or are being considered in several countries. In short, now is a demanding period for the global insurance industry and Deloitte can be there to help you.