In spite of the daily news reports of carriers of all sizes seeing lowered financial results, there are factors affecting the global market are coming together to create opportunities for growth. Such was the premise made by Michael Costonis, partner at New York-based Accenture at his presentation at LOMA’s 2009 Emerging Technology conference in San Diego this week.
“The distribution of economic power is changing,” Costonis told LOMA attendees. Quoting the Economist’s Intelligence Unit statistics that predict the dropping below in 2010 as a global power, Costonis said all the expansion in the global economy in 2009 will be from emerging countries.
“Bottom line? The speed at which the sub-prime crisis fueled a global economic crisis is indicative of risk and volatility going hand in hand with growth and opportunity for insurers,” he said.
Costonis told attendees that leading insurers keeping tabs on global risk used to be a weekly or even monthly undertaking, generally conducted by picking up information in publications such as the Wall Street Journal. “Thanks to our changing global economy, this is now a daily task,” he said.
Costonis based his presentation on two recent pieces of Accenture research, a Multi-Polar Survey conducted in collaboration with the Economist that targeted 376 business leaders in 63 countries, and Accenture’s High Performance Research, which targeted 1,000 business leaders across all industries.
“Our research leads us to believe that the trend toward a multi-polar world is being accelerated by information and communications technologies, greater economic openness, and the growing size and reach of multi-national companies,” he said.
Costonis maintains that a rapidly growing aspirational middle class and predictions of increased per-capita incomes will lead to increased consumer expenditures. “Plus, insurers will charge higher premiums due to catch-up dynamics and mandatory cover,” he said.
The opportunities are five-fold, he added. “Insurers that focus on bridging to customers across the globe will have the first advantage as the market shifts back to a healthy center,” Costonis told attendees. According to Accenture research, 86% of companies surveyed said they plan to boost sales beyond home markets. “Carriers that invest in satisfying the customer, including adapting to cultural differences and creating localized products, will win,” he said.
Another opportunity facing insurers is in the realm of talent acquisition and retention. “Taking a long-term view on talent by investing in new and localized talent pools, is important,” he said, “and so is working with local governments, communities and universities to build a pipeline of skills.”
Innovation is yet another area of focus that is bound to reap long-term rewards, especially if the insurer helps shape innovation policy by engaging in a local dialogue with those implementing it.
The idea that high-performing insurers are looking to more dispersed capital sources to ease short-term pressures is yet another indication that these companies are seizing opportunities to be more successful in managing through our current economic crisis.
Costonis concluded his presentation by telling attendees that resource sustainability presents yet another opportunity. While less of a priority for insurers, sustainability does affect multi-national carriers, because if they recognize environmentally-related regulations, tax and incentive differences between regions, they can place their operations where they will get the maximum return, he pointed out.
“Know where you want to compete and with whom you want to engage,” he said, “and then acquire the right talent. The true leaders will turn this economic downturn into a positive by developing centers of excellence and making it a point to be authentically local.”
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