of insurance CEOs are changing their strategies for customer growth, loyalty and retention.
Insurance CEOs are upbeat about their companies’ prospects – nearly 90% are confident about revenue growth.
But the survey raises some questions about whether their organisations are moving quickly enough to keep pace with the accelerating and potentially disruptive changes in the marketplace, many of which are being originated and shaped outside the sector. Only 16% are planning the fundamental strategic shifts that are likely to be required.
Industry in transformation
As our Insurance 2020 analysis highlights, insurance is undergoing a transformation in customer expectations. This is reflected in our CEO survey, with 58% of industry leaders expressing concerns about the shift in consumer spending and behaviour.
As the changes in customer expectations reshape the key competitive battlegrounds and business opportunities within the industry, nearly 90% of insurance CEOs are planning to change their strategies for managing customer growth, loyalty and retention (nearly 40% are anticipating major changes). Building the customer base and improving customer service are the top two priorities for investment.
Developments in technology are also changing how products are designed, underwritten and distributed and could open the door to new entrants. More than 80% of insurance CEOs are planning to increase investment in technology and more than 60% plan to develop their capacity for innovation. Perhaps surprising, most industry leaders say they are not concerned about the speed of technological change or the threat from new entrants.
Seeking out overseas opportunities
The focus on expansion in a range of largely under-penetrated emerging markets is reflected in the fact that Latin America (88%) tops the list of the regions earmarked for growth over the next 12 months, with most parts of Asia also scoring more than 80%. However, noticeably fewer insurers are targeting growth opportunities in Africa (67%) than their counterparts in banking (88%).
Competition for talent heats up
Insurance CEOs see the limited availability of key skills as the biggest threat to growth. Nearly 80% are planning to change their strategies for managing talent as a result, with nearly 30% seeing filling talent gaps as a top three investment priority. The changing strategies for managing talent and succession in an evolving sector are further reflected in the emphasis on diversity, rotation and global mobility.
Cutting across these competitive developments is the need for a cultural shift as insurers strive to rebuild public trust – 55% of insurance CEOs are concerned about lack of trust in the industry.
More than 60% of insurance CEOs are developing a framework to support a culture of ethical behaviour. Nearly 60% are stepping up investment in managing their corporate reputation.
Ninety-five per cent of insurance CEOs say that governments and regulators influence their strategy, almost as many as customers (99%), though far fewer are looking to engage more closely with government (76%).
Concerns over the protectionist tendencies of national governments are rising again (47% of insurance CEOs citing such concerns in 2012). This is mirrored in concerns over tax (57% of insurance CEOs citing such concerns) and government response to debt and fiscal issues (73% of insurance CEOs seeing this as a concern).
Ahead of the game
The insurers that come out on top will be sharpening customer-centricity and have a superior capacity for innovation and constant reinvention. They’ll be able to anticipate change, and how it affects them. They’ll be nimble enough to quickly capitalise on emerging opportunities.
It is important to look beyond immediate peers at the competitive threats coming up under the radar. But there are also significant opportunities for forward-looking insurers.
We’re seeing huge and often destabilising shifts in the climate, the economy, government spending and welfare. Smart and innovative insurers are going to be at the forefront of helping businesses and society to deal with these changes.