Insurance companies worldwide have suffered less than banks since the collapse of the subprime market in the United States in late 2007,
In its recent report, “Tomorrow’s Leading European General Insurer,” Celent identifies three main factors driving strategic decisions by European insurers:
1) Cost efficiency. Despite stagnating premiums, insurers are intensifying their efforts to decrease their expense ratios across the European markets and lines of business. This trend is less cyclical than structural; it had been apparent before the financial crisis.
2) Capture competitor share. European markets are becoming more concentrated, largely because of acquisitions among larger incumbents. Small and midsize insurers are growing faster than large groups, suggesting that market share is being captured organically.
3) Capture more customer value. There is a trend towards gaining better customer understanding. In a market that struggles to grow, insurers have decided to leverage existing assets: their client data. Successful insurers are increasingly differentiating by capturing greater customer value. Their approach is to better use customer data to appeal to customers with improved products and services.
These trends force European insurers to rethink their business models. According Celent’s report, these insurers need to adjust and now consider the following actions:
• Refocus distribution efforts. European insurers need to understand the changes that affect the distribution channel landscape and invest accordingly.
• Apply manufacturing techniques. The use of manufacturing techniques implies the implementation of adequate technology to reach operational efficiency and maximize value to customers.
• Position the brand proposition. New product and service innovations are designed to better appeal to customers and thereby secure a greater share of the market.
• Apply customer science. Customer science is intended to increase understanding of customers, and then to differentiate among customers to capture greater value.
