Global insurance outlooks 2013
Many Canadian life insurers pursued successful de-risking and re-pricing initiatives in 2012, maintaining or strengthening their balance sheets and capital positions. To achieve 2013 profitability targets, companies must continue to improve underwriting practices and focus on expenses to sustain hard-won cost reductions.
In the new economic reality of slow growth and long-term low interest rates, these strategies will be crucial to success:
- Address shifting distribution models and consumer demographics
- Prepare for regulatory and accounting changes
- Consider joint ventures, acquisitions and venturing beyond core business lines
- Use operational excellence and technology investments to create a competitive advantage
A significant portion of the Canadian market has traditionally centered on accumulation of assets under management and complex retirement savings and insurance products. However, many of today’s consumers have different product needs and buying preferences.
Insurers need to respect those differences to capitalize on the risk transfer and savings needs of young customers, pre-retirees and retirees. It will likely be necessary to restructure operations and distribution models to communicate and transact with customers on their terms.
The best strategy for some small insurers may be joining forces -- engaging in joint ventures or being acquired by larger foreign insurers.
Life insurers face new regulatory and accounting initiatives that address actuarial reserving, capital, solvency, governance and risk. These changes will affect existing processes, controls and other areas.
Thus, insurers must fully understand the changes when embarking on internal IT projects or other transformations.
Other growth strategies
Larger insurers in 2013 might move into lines outside their core business or acquire businesses outside Canada. The best strategy for some small insurers may be joining forces -- engaging in joint ventures or being acquired by larger foreign insurers.
Other than these wholesale changes, life insurers can improve profitability through innovation --product reinvention, tax strategies, and sales force or asset-liability management. Outsourcing and process consolidation are two particularly cost-effective strategies.