Global insurers look to operational excellence to support growth in emerging markets, according to EY
New York, 14 April 2014
As the dramatic rise in consumer income in developing countries continues to drive an unprecedented expansion of the middle class, operational excellence will be an imperative to establish and expand profitable microinsurance in emerging markets. EY and LeapFrog Investments, a profit-with-purpose private equity fund and the world’s largest dedicated investor in insurance and related financial services to low-income consumers in Africa and Asia, outline the opportunities in a new report: Operational excellence for insurers focusing on emerging consumers.
By 2030, the global middle class could constitute 50% of the world’s population. To reach the emerging consumer and convert opportunity into profitability, insurers must address uncertainty and formidable operational challenges if they are to achieve their growth targets.
“Operational excellence is a perfect solution for investors and insurers seeking new business opportunities to generate sustainable value in the emerging consumer market,” says Andreas Freiling, EY EMEIA Insurance Leader. A transformational approach such as Operational Excellence is required to achieve it. That is where investment can bring true value – not just in capital, but also technical knowledge and expertise to develop cost-efficient distribution channels and products to drive organizational change for profitability.”
The report highlights these components of operational excellence that are critical for success in tapping the emerging consumer market in Africa and Asia:
- Need for greater financial, operational and technical investment
- A differentiated operational strategy, backed by a dedicated organization, skilled manpower and robust performance management structures
- The ability to effectively target emerging consumers through awareness (education and marketing), affordability (simple and innovative product design), and accessibility (ease of purchase, service and claims handling)
Investors with a value-based investment style and insurers driven by operational improvement activities will play a dominant role in developing this new market segment.
To read the full report, visit www.ey.com/insurance: Operational excellence for insurers focusing on emerging consumers.
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