Insurance equity analysts expect higher profitability, despite difficult market conditions, from the best performers, according to findings of a global survey of insurance equity analysts by Accenture.

Analysts rank “pricing strategy” and “quality of service” as the industry’s top value drivers over the next three years, named by 95 percent and 94 percent of the respondents, respectively, ahead of “data analysis capabilities” (86 percent).

The survey also reveals that underwriting risk management is perceived as the most critical technology investment to improve business performance, mentioned by two-thirds (67 percent) of the analysts surveyed.

“To act decisively in a transforming marketplace and achieve organic growth, rich data, advanced analytics and predictive modeling are invaluable,” said Meyer. “These capabilities help insurers understand and segment their markets, and also continually refine their business and operating models to ensure these are ideally suited to provide each market segment with the right products, at the right price and through the right distribution channels.”

Expansion into emerging markets is also considered by analysts as important or critical to earn superior ratings.

Environmental issues, such as the increasing volatility of natural catastrophes, are the most widely cited industry challenge for P&C insurers (58 percent), while new regulations and reforms, such as the Solvency II directive and the Dodd–Frank reform, were perceived as the No. 1 threat for life insurers (83 percent). The uncertainty of financial investment returns was the number-two challenge for the overall industry, cited by more than half (55 percent) of P&C analysts and almost two-thirds (65 percent) of life insurance analysts.

“Insurers will have to convince the analyst community that they have the right strategy to navigate these challenges while raising the bar for revenue growth and profitability, if they want to earn superior ratings,” said John Del Santo, global managing director of Accenture's Insurance practice.

Commissioned by Accenture and conducted by Institutional Investor Market Research Group, the survey queried 68 leading insurance equity analysts in 16 countries and covered a diverse range of topics, including profit and growth strategies in the context of major industry challenges.

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