Operational excellence for insurers

Providing insurance for the emerging customer

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For global carriers seeking growth from emerging markets, the outlook is very bright. The dramatic rise in income for consumers in developing countries is occurring on a greater scale than at any other time in history, driving an unprecedented expansion of the middle class.

Current projections show that, by 2030, the global middle class could constitute 50% of the world’s population. Financial inclusion – that is, access to banking services and insurance products – is critical in this societal transformation, providing valuable safety nets and springboards to potentially billions of consumers in the low-income sector who we refer to as emerging consumers.

To convert the emerging consumer opportunity into profitability, however, insurers must address considerable uncertainty and formidable operational challenges. Specifically, operational excellence is an imperative to establish and expand profitable insurance businesses across Asia and Africa, even as today’s low-income consumers become tomorrow’s middle class.

Outlining the opportunity for global carriers is a new report from 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. The report highlights the various components of operational excellence that will be required for success in tapping the emerging consumer market. Those requirements include:

  • Greater financial, operational and technical investment
  • A differentiated operational strategy backed by a dedicated organizations, skilled manpower and robust performance management systems
  • The ability to effectively target emerging customers through awareness (marketing), affordability (products) and accessibility (ease of purchasing, servicing and claims handling).

Taking action: the right response for insurers

In the end, investors who believe that market entry provides more opportunities for profit than alternative investments will lead the development of this segment. Operational excellence – in its strategic, process and technology manifestations – will be the perfect solution for investors and insurers to support this growth journey and generate sustainable value in the emerging consumer segment.

How big is this market?

Insurance for low-income consumers has evolved differently across geographies — from 200% growth between 2008 and 2012 in Africa to a steady evolution in India and other Asian economies.

EY - Size of the market

For more information

EY - Operational excellence for insurers cover Download Operational excellence for insurers focusing on emerging consumers as a printable document.