In August, much to the surprise of their own governments, economic data suggested that France, Germany and Japan had exited the recession. Similar good news has yet to be heard in the other major countries, but Celent’s recent research about perceptions and attitudes of insurers in this recession shows that there is increased optimism in the world of insurance.
Over the course of the first half of the year, insurers have made more progress in implementing tactical responses to the current recession. Around 80% have already, or are in process of, freezing discretionary spend and travel. Two-thirds are in the process of, or already have, cut staff salaries. But these tactical responses dont inspire much faith.
In our new upcoming report on the impact of the recession, we added a new question aimed at getting a strategic response out of insurers.
In the first quarter of 2009, the outlier was a change in strategy, which only 25% of respondents had done—a clear reflection of the severity of this measure both on long-term capacity and the difficulty to execute. By mid-year, the number climbed to almost half of respondents who reported undertaking this difficult task.
The other area with the most noticeable change was that of budgets. By the end of the second quarter, almost two-thirds of insurers had revised, or were in the process of revising, budgets.
Streamlining of processes is the top area of focus for insurers, and is already underway or completed according to 77% of respondents. The next highest level of activity is divestment of assets. A return to the focus on core business is a response that is to be expected in difficult times, and 70% of respondents had undertaken this option.
Outsourcing also is on the agenda. Responses indicate a higher frequency of business process outsourcing to IT process outsourcing. This is probably attributed to the already high level of IT process outsourcing in the industry. Almost half of respondents have already outsourced business processes, and another fifth are taking this under consideration.
There are a large number of insurers considering or undertaking the launch of a new product or a new channel. More than 50% of respondents are in discussions, or already doing so. Launching into a new geography and acquiring new company assets are strategies that appear fairly low on insurers' priority lists.
So the question to your business is what are you doing in this recession? Many insurers clearly see opportunities in these difficult times, and such innovative and progressive strategies are clearly going to put them ahead of the pack when the turnaround comes.
This blog has been reprinted with permission from Celent. Catherine Stagg-Macey 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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