The turmoil in the global economy has done little to dissipate the desire of insurers to expand into new markets. To this point, a new report from Bermuda-based Accenture suggests that 62% of insurers plan to grow outside of their home market in the next 12 months.
Querying more than 100 life insurers and property/casualty insurers in 16 of the world's largest insurance markets, the survey detected scant evidence of recalcitrance about international expansion despite current economic conditions. In fact, 75% of respondents said they believe that the turmoil will offer more opportunities to grow outside of their home market in the next three years.
"Having already maximized their domestic footprints, carriers are looking to emerging markets, where premium growth is significantly higher because of catch-up dynamics,” says Serge Callet, managing director of Accenture's Insurance practice.
To enter these markets, carriers may well take advantage of attractive stock prices as an opportunity for mergers and acquisitions. Yet, respondents acknowledged the ability to integrate and manage operations across several countries and/or regions, may well be the limiting factor in these expansions. Accordingly, more than 80% of insurers contemplating international expansion replied that they are currently undertaking or plan to implement changes to their back-office capabilities, and to their information technology infrastructure and services.
“To generate profitable international expansion, insurers will need to accelerate product
innovation, drive new levels of operational efficiency, and increase the simplification and standardization of their internal operations across entire regions,” Callet says. “In this context, the execution of a sound expansion strategy will make all the difference."
By geographic region, carriers replied that they foresaw the greatest opportunity for growth in Brazil, Russia, India and China (48%), followed by Asia (43%) and Western Europe (43%).
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