People power critical for key transformation in insurance in 2014
As insurance companies redefine their operational models to remain profitable and competitive in 2014, the place of people power and skills development has been identified as most critical.
This key factor, it is also said, would complement other transformation efforts including product development and innovation, technology and the likes, to be able to yield expected results.
Therefore, whether an insurer is looking to build marketing capabilities to reach underserved segments, become more analytics-driven in data management efforts, or make the finance operation an internal business partner, the people on staff and the skills they bring to their jobs could become a competitive advantage, as carriers alter business models and infrastructure to up their games.
Deloitte Analysts in their 2014 Insurance Sector Report note that prolonged periods of slow growth, heightened competition, and a drive for capital efficiency have combined to spur more carriers to reconsider how they conduct their business. The question, they ask, is whether insurers will settle for tweaks to produce short-term boosts in efficiency, or instead make bolder moves to overcome more fundamental challenges in their business models and position themselves to possibly leapfrog ahead of their competitors.
“While carriers should continue to seek bottom-line improvements by squeezing out unnecessary costs, they should also be looking to make more sustainable efficiency and productivity plays,” says Neal Baumann, global insurance sector leader at Deloitte Consulting LLP.
“In order to achieve more impactful changes, they will likely need to rethink core operating models and how to more effectively leverage key capabilities across the enterprise.”
Included could be efforts to build more strategic marketing capabilities targeting underserved segments, upgrade technology systems to more effectively leverage underwriting and pricing data for competitive advantage, as well as assess alternative distribution options to reach a wider array of consumers at a more economical cost.
One message that resonates throughout this outlook, however, is that people power, not just process or system changes can be one of the biggest factors in any transformation effort. Talent recruitment and development therefore remains a significant challenge for many carriers.
What’s new for 2014?
Carriers will more aggressively start transforming their core operating models to be more responsive, nimble, and cost-effective. To support these changes, top management will be challenged to make strategic investments to overcome organisational obstacles to flexibility and growth, particularly when it comes to data management and distribution.
On a more fundamental level, insurers will likely consider adjustments to their employment model. “They may broaden recruiting strategies by determining the basic competencies required for hard-to-fill positions, and then actively target candidates not just from outside the company, but beyond the industry as well — for example, hiring out-of-work teachers with math skills who can be retrained for a career as an actuary or data analyst,” according to Andy Liakopoulos, a principal in the Human Capital Practice of Deloitte Consulting LLP. “They could also look to bolster continuing education and cross-training programmes.”
By: Modestus Anaesoronye