What insurers must ponder…
From the first day of 2014, insurance companies at all levels have been confronted with finding a workable model that would enable them cope with the challenging regulatory and operating environments that were hard nuts to crake in most parts of 2013.
They have been having series of strategic meetings even with their board members on how to enhance bottom line, create shareholder value, cope with new premium policy, and recover receivables of 2012 backwards and early submission of accounts among other issues.
Even at the industry level, the Nigerian Insurers Association (NIA) as well as Nigerian Council of Registered Insurance Brokers (NCRIB) have also been looking at how to make market agreements enforceable, enhance market discipline and ethical conduct to better the business environment.
In all of these, companies’ management should begin to ask critical questions about their business model, and analysts from Deloitte here share some thoughts.
The question is which carriers will have the vision and ability to proactively anticipate and adapt to new market realities? Those that do are more likely not just to survive, but to prosper as they reposition themselves against traditional as well as emerging competitors.
Among the questions insurers should be asking of their leadership teams:
What can I do to transform my operating model to improve my organisation’s ability to target underserved markets and more effectively reach them? How may I generate more actionable market research, leading to practical segmentation?
Ultimately, how can I enhance the customer experience and the relevance of my products and services? How can insurers keep up with the demand for 24/7 accessibility and immediate gratification consumers have come to expect from other industries outside of financial services? How can we find the right balance and account for the cost of offering multiple distribution systems, if we choose to go that route?
Would a strategic merger or acquisition help make up for the lack of organic growth while improving the bottom?
Where should insurers go from here? Would a deal be the ticket to achieving scale, enhancing capital efficiency, and expanding market share? Would an acquisition make sense in terms of importing new markets, capabilities, and talent?
Can insurers simplify their product offerings and expand their distribution options to not just become more competitive for the industry’s traditional target markets, but actually expand the overall pie by reaching underserved and underdeveloped consumer segments?
How should insurers deal with regulatory uncertainty? How can they better integrate regulatory considerations into strategic scenario planning, involving all C-Suite inhabitants? Can nimbleness in responding to regulatory requirements be turned into a competitive advantage?
How can insurers alter the way they recruit and develop talent so that they close the widening skills gap in their organisations? And how can they create a more flexible career path to retain their most valuable employees, while being positioned to quickly move individuals to areas within the company where their skill sets are most urgently needed?
What can insurers do to evolve their finance operation into more of an internal business partner to help identify and capitalise on growth opportunities, without neglecting the function’s traditional stewardship role? What skill sets need to be developed or imported to make such a transformation a reality?
“Whatever the challenge, this outlook indicates that simply maintaining the status quo is likely no longer a sound business strategy no matter which operating model is employed by a particular insurer, given the macro- and microeconomic trends buffeting the industry from all sides, the analyst said.
By: Modestus Anaesoronye