"The bad news is that carriers face fundamental, potentially game-changing developments threatening their ability to achieve top- and bottom-line growth. However, the good news is that insurers also have a number of strategic options and support tools available to improve their chances, not just to survive, but to prosper," said Rebecca Amoroso, vice chairman and U.S. insurance sector leader, Deloitte LLP. "Leading-edge carriers are responding proactively to these critical challenges in a variety of ways, employing new policies, practices and products to bolster their operational efficiency and effectiveness."
Findings of the report include:
•Insurers can't wait for the economy to rebound. It could take years for a full economic recovery to be achieved, making organic growth and profitability problematic, particularly for carriers that merely circle the wagons and try to maintain the status quo rather than experiment and innovate.
•Virtual consumers have arrived. Buyers of many types of coverage are increasingly living their lives and doing business online, and will expect their insurers to routinely communicate and provide services to them in the virtual world.
•Carriers and producers reassess relationship. Agents and brokers will remain a primary sales outlet for many carriers, but both parties are re-examining their relationship and considering alternatives. Insurers and producers need to distinguish their value proposition— for one another as well as for buyers.
•Rules of the road uncertain. With regulatory reform a work in progress, both in the United States and globally, carriers face an extended period in which they won't know what will be expected of them, what compliance demands and costs they'll face, or even whether they can remain viable in certain markets.
•Data is a strategic asset, critical to enterprise risk management success. Given the expected demand for additional information and enhanced enterprise risk management from internal and external stakeholders, insurers will be upgrading their data management and enterprise risk management systems, as well improving their operations based on what they learn from the numbers they collect.
•Tech to the rescue! Beyond data management, the use of advanced analytics, predictive models, underwriting and claims fraud software, cloud computing and other technology tools could make the difference between success and failure for many insurers.
"Overall, insurers remain bearish about the prospects for rapid economic growth in the next year or two," said Sam Friedman, who leads Deloitte's insurance sector research. "There are signs of a recovery slowly emerging, albeit with setbacks expected along the way."