Driving Insurance

Shifting financial markets and six types of consumers are motivating change in the insurance industry

In a study just released in 2009, the IBM Institute for Business Value worked with the largest IBM financial services research survey sample in its history, and from this work emerged an informed perspective on the characteristics that might be expected in the victorious integrated insurance enterprises that will emerge. In the global survey conducted in association with the Economist Intelligence Unit (EIU), more than 8,000 industry participants, including about 150 insurance executives and a large number of consumers were interviewed to determine future trends and drivers. The study focuses on insurance but provides lessons for financial services as a whole, given the inter-relation of businesses and financial markets that was vividly demonstrated in the last two years.

When the global financial crisis began in 2008, the same corporate policies of insurers that led to lower returns also led to considerably less exposure from risky assets. As a result, the business of insurance is still sound, but lacking the insights about how to meet the needs of increasingly empowered consumers. Insurers are secure in their roles as calculators and bearers of risk, but are less able to pursue additional goals and more profitable growth business.

Key lessons from the “Balancing the scales” study include:

In all downturns there is a sorting out process, and industries often consolidate. Some even vanish. The winning insurers will be those with the skills and insight to optimize their customer service, agent networks and other channels to meet the needs of all the various client segments within each market.
Insurance will have to differentiate on client knowledge and experience rather than product range, using advanced segmentation analytics that can deliver more customer insight.
Against a backdrop of turmoil, mistrust and damaged reputations across the global financial services sector, and a global economic downturn, insurers are facing an imminent skills crisis caused by an increasingly aging workforce.
Top companies will balance the long-term needs of customers (for example, policy holders) versus the short-term expectations of capital markets to emerge ahead.

Balance, innovation and prudence in the face of a shifting market will lead to the creation of a stable and dynamic insurance future " one of the fundamental needs of a stable society.

Download the full IBM Institute for Business Value Report

Balancing the scales - Toward a stable and dynamic insurance future (240KB)

View the video (00:04:58)

Navigating the financial crisis

Leading Insurers proactively position for long-term success (139KB)

About the author

Christian Bieck

Global Insurance Leader, IBM Institute for Business Value
David Notestein

Financial Services Sector IBM Institute for Business Value - Insurance
IBM Global Business Services

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