What does recession restoration imply for insurers?
The COVID-19 pandemic has sparked a recession like we’ve never seen before. While the severity of this recession has yet to be determined, we know that events in the global economy will have an impact on the insurance industry. However, leading insurers around the world are responding with innovative answers that show that smart strategic games are still possible in this environment.
The current insurance context
While we may not yet know the full depth of the global recession, it is clear that the COVID-19 pandemic had a significant impact on insurers’ market caps, which has gained momentum much faster than previous financial crises. Certain areas such as trade credit, inland shipping and compensation for workers are at risk, as are segments such as the small and medium-sized business market.
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Accenture’s most recent report, Strategic Plays for Recession Recovery, looks at the delicate mix of measures previous outperformers have taken to stay stable during recession and come out stronger after recessive times. The evidence shows that insurers outperformed their peers in previous recessions by cutting structural costs and strategically reinvesting those savings in core sources of competitive advantage to drive growth. Today, however, insurers must employ unique, differentiated strategies.
Strategies to reduce costs after COVID-19
Current examples of cost reductions across Europe are:
- A UK based company is optimizing services and increasing operational efficiency by moving to an intelligent operating model that combines data analysis, applied intelligence and human ingenuity
- An Italian insurance company streamlined sourcing and radically changed the way source-to-pay services were provided. This insurer is now able to manage expenses more effectively, promote compliance, and strengthen risk management.
We also see several examples to support the growth of insurers across Europe through new initiatives:
- There are thousands of uninsured vehicles in Finland, resulting in millions in unpaid insurance premiums. Using blockchain technology, the Finnish Ministry of Finance has created a vehicle identity platform that could potentially address this issue
- New partnerships such as Generali Global Corporate & Commercial (GC&C) in collaboration with the insurtech company Descartes Underwriting offer parametric insurance products
Insurers are also focusing on customer service to continue their growth. For example:
- A Finnish insurance company uses human-centered research to better meet customer needs.
- A large Spanish insurer is using artificial intelligence to reduce response times to customer communications.
Deciding on your next game is a complex one. Many leading insurance companies are working with consulting firms to develop an impact analysis around the COVID-19 pandemic in the insurance industry and identify opportunities in these uncertain new times. In the next post, we’ll show how strategic partnerships can help insurers recover from the recession.
Contact me to discuss how to build your company’s recession response.
Read the full insurance report: Strategic Plays for Recession Recovery Report