Global insurance outlooks 2013
Canadian property-casualty (P&C) insurers face a mixed macroeconomic environment. On the bright side, the tentative global recovery has enabled insurers to focus on growth opportunities from acquisitions and new products.
On the other hand, continued weak investment returns, low interest rates and increased regulatory activity are throttling growth, requiring insurers to enhance underwriting capabilities and manage costs. And as always, growth and profitability strategies must be balanced against their risks.
To respond to these market forces, Canada’s P&C insurers must execute in these areas:
- Identifying growth opportunities
- Enhancing customer-centricity and channel options
- Harnessing technology for intelligent underwriting
As economic conditions improve, insurers can no longer be content with maintaining profitability through modest underwriting results. They must seek and embrace new growth and diversification strategies to stay competitive.
Acquisitions are a way to increase revenue and diversify exposures—via new products, distribution networks and an expanded geographic presence. However, acquisitions can present new risks, as well as integration, cultural and regulatory challenges.
To profit from new markets, insurers must combine strong research capabilities with an talent for innovation. Solid operational efficiencies are also a necessity.
As always, customer service will be a differentiator among insurers. They must deploy adequate resources to meet customer expectations and compete effectively with real-time insurance solutions.
Customer preference and channel trends
Customer behavior and expectations are evolving quickly, driven by trends such as the growth of mobile technology and social media. These trends are changing how insurers market, price, sell and service their products.
Also, web-based businesses are delivering new levels of customer-centricity, raising the performance bar for every retail business.
Online channels are an important part of insurance distribution, but they are only one component of the sales cycle. Insurers must gauge how current and prospective customers prefer to purchase insurance—agents/brokers, direct or online—and then invest in the appropriate channels.
Growth through technology
To outperform competitors, insurers must maximize customer profitability and persistency. Infrastructure and technology investments can help firms accomplish these goals by delivering improved analytical and decision-making capabilities.