It will take committed focus and diligence on operational excellence and innovation for insurers to achieve their strategic growth goals for 2012 in the face of a perpetually tough global economic climate.
Deloitte LLP’s Insurance group recently released 2012 Global Insurance Outlook: Generating growth in a challenging economy takes operational excellence and innovation. The introspective report places the impetus for strategic growth on aspects of the business that companies can manage in the face of a volatile and capricious global economy that cares not for the goals of any specific industry.
Sam Friedman, Deloitte’s insurance research leader said, “While achieving growth, operational excellence and innovation in such a difficult economic and competitive environment might be easier said than done, opportunities are available for insurers that can seize the moment. There are many options insurers might consider to grow even in the toughest of economies if they can overcome the obstacles they face.”
Trudging through a low-interest rate environment with near record unemployment establishes certain boundaries for growth but insurers can exercise some control over their own future by preparing for regulatory changes that will potentially arise when the Federal Insurance Office reports to Congress on January 31 as well as bracing for the effects of Solvency regulatory burdens and for larger institutions, the possibility of being designated, either nationally or globally, as a Systemically Important Financial Institution.
Product innovation and augmentation are also areas where individual companies can exert control however market research must be done so that product changes are relevant to the needs of customers operating under new economic parameters. For example, the report mentions that more life and annuity hybrid products are emerging to meet multiple needs such as incorporating a long-term care benefit into a life or annuity product or combining term and universal policy attributes.
The report mentions other instances in which the industry controls its own fate. Although whole life sales are on the rise, life insurance sales in general are at a 50-year low. There are, however ways that insurers can bring the proverbial horse to water and try and nudge him drink; modernizing and streamlining marketing efforts are one of them. Moreover, as baby boomers prepare for retirement there are opportunities for annuity growth and other retirement options that life insurers can focus on.
Overall, 2012 will be another year of watching the global economy dip and retract its toes in and out of the pool of recovery but the report implores insurers to not sit on their hands and focus on growth, operational excellence and innovation.