What is the next best strategy for insurers in response to the economic crises? As shown in an upcoming Celent report on insurer response to the market crisis, companies are now taking or have completed the short-term cost savings/efficiencies steps such as staff redundancies, renegotiation with suppliers, asset rationalization, etc. But, once these actions have been taken, attention must move to top-line growth.
Prior to last October, there were a number of initiatives around innovation and speed to market in order to expand market share. After so many years of continued growth, there was a belief that “if we build it, they will come.”
Now, it is realized that the contraction of the economy is likely to be “semi-permanent”—that we may be adjusting to a new anchor point; that growth may be stalled in the 1% to 2% range for some years to come.
Consumer confidence and spending is expected to remain low, and will result in fewer personal and business assets to insure. This means that the market pie has shrunk, and that it is not likely to grow significantly any time soon.
How does a company get a bigger piece of this smaller pie? What strategic response fits best in this environment? Across industries, customer service/experience initiatives will be stressed. Look for an increased focus on increasing customer penetration and retention.
For insurance, there also will be investment in improving the experience of managing the distribution of products and services. More satisfied and productive producers bring you more business. Insurance companies will focus on the issues that are important to their agents (see Celent reports Independent Producer Survey: Technology, Services, and Other Drivers of Carrier Choice (Property/Casualty Edition) and Independent Producer Survey: Technology, Services and Other Drivers of Producer Choice (Life/Annuity/LTC/Health Edition).
Insurers are also upgrading their process and automation dealing with the administration of agents and producers. Some examples include:
· Increasing the in flexibility and speed in establishing and administrating sales incentive programs
· Managing very granular commission schemes — down to the individual coverage level to drive sales of specific product features
· Reducing the costs of recruiting, retaining and managing producers and producer licenses.
Look for more activity in the producer management area in the months to come as insurers seek to “get their fill” of the market pie.
This blog has been reprinted with permission from Celent. Mike Fitzgerald is a senior analyst in Celent's insurance practice, and can be reached at firstname.lastname@example.org.
The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.
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