Facing the Future: Blueprint for Growth


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Insurance companies have a once-in-a-generation opportunity to gain a competitive edge; but only if they're able to navigate a complex set of decisions in short order. Research, sponsored by State Street and conducted by the Economist Intelligence Unit, charts the way forward for Insurance companies – providing a blueprint for growth. This is a preview of those findings.

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Facing the Future: Blueprint for Growth

  1. 1. LIMITED ACCESSFacing the Future: Blueprint for Growth2013 State Street Insurance Survey HighlightsMay 2013This presentation features data from the2013 State Street Insurance Survey,conducted by The Economist Intelligence Unit.
  2. 2. LIMITED ACCESS2013 State Street Insurance Survey• This survey, sponsored by State Street and conducted by The Economist Intelligence Unit, examinesthe current state and future outlook for the global insurance industry.• Fielded during April 2013, the survey encompassed 307 insurance executives globally across allindustry sub-sectors. Half of respondents were C-suite, while the remainder were seniormanagement.About the Research253%9%19%7%12%LifeHealthP&CReinsuranceDiversified26%38%36%AmericasEMEAAPACRespondents by Region Respondents by Industry Sub-Sector
  3. 3. LIMITED ACCESSMacro Trends Affecting Insurers GloballyLow YieldEnvironmentChangingDemographicsTechnology &DataRegulationInsurers recognize that theymust pursue youngersegments if they want togrow, requiring a differentgo-to-market approach.As insurers seek ways to boosttheir returns, they’re expandinginto new asset classes, whichrequires new expertise andrisk models.Many insurers have legacysystems assembled throughacquisitions, which can hindertransparency and limitinvestment teams.3Regulation can addcomplexity, potentiallyincreasing costs anddecreasing the speed atwhich a company candevelop new products.Four key trends are affecting the insurance industryand are causing firms to re-think their strategy.
  4. 4. LIMITED ACCESSStrategic Priorities for InsurersWhat is the Top Strategic Priorityfor Your Business Today?28%37%22%27%24%15%23%31%23%25%28%17%14%12%16%14%11%11%12%11%0% 20% 40% 60% 80% 100%GlobalAmericasEMEAAPACEnhancing product offeringsStrengthening distribution modelProactively managing capital to improve return on investmentExpanding into new geographic marketsOptimizing mix of business lines and productsSource: 2013 State Street Insurance Survey 4• Our research indicates that insurance firmsare optimistic about the future, yet face acomplex set of decisions today.• Globally, the top strategic priority for insurersis enhancing their product offerings (28percent), followed closely by strengtheningdistribution models (24 percent).• Important regional differences exist. In theAmericas, enhancing product offerings ranksat the top, while the No. 1 priority in EMEA isproactively managing capital to improvereturn on investment. In Asia, the most urgentpriority is strengthening distribution models.Enhancing product, distribution and the proactivemanagement of capital are critical priorities for insurers.
  5. 5. LIMITED ACCESSFive Challenges Facing Insurers GloballyManagingRiskImproving the assessmentand pricing of risksBalancing liquidityand reserve adequacyRegulationandComplianceAdapting to evolvinginsurance regulationsEnsuring transparency ofbusiness policies and processesDrivingInnovationBringing new, innovativeproducts to market quicklyAdapting distribution tochanging demographicsFinding NewSources ofValueEffectively allocating capital to themost business-critical prioritiesInvesting in morecomplex investment typesOptimizingBusinessStrategyConverting fixed coststo variable costsUsing data more effectivelyacross our company54%59%51%49%49%58%56%50%58%53%35%21%32%26%44%23%26%29%28%22%Minor challenge Major challengeSource: 2013 State Street Insurance Survey 5Insurance companies face a number of urgent challenges,amid a market and regulatory environment in flux.
  6. 6. LIMITED ACCESS55%41%37%21%23%26%25%29%0% 20% 40% 60% 80% 100%Re-price new business to adapt to market conditionsRedesign products to be less sensitive to marketsMake a large scale investment in IT systemsDivest non-core businessEvaluating for action within the next 12 monthsEvaluating for longer term action (i.e., not within the next 12 months)Four Strategic Actions Insurers are Poised to Take6Which, if any, of the Following isYour Firm Evaluating for Action?Source: 2013 State Street Insurance SurveyInsurers recognize the need for change and are activelyre-positioning themselves for a new environment.
  7. 7. LIMITED ACCESSScenario AWhich of these statements do you believe willbe true for the insurance industry in five years?Scenario BNational regulatoryregimes will convergetoward a global standardRegulatory regimes will not beharmonized; diverse nationalstandards will existThe cost of regulationwill be mostly absorbedalong the value chain, notpassed to the end consumerThe cost of insurance industryregulation will be passedmostly to the end consumerInsurers’ profitability will declineInsurers’ profitabilitywill increaseThere will be more mergers andacquisitions in my marketThere will be fewer mergersand acquisitions in my market31%23%15%35%8%4%4%6%36%28%31%23%3%2%11%3%60% 40% 20% 0% 20% 40% 60%Looking AheadNote: The percentage of insurers responding “Neutral” or “Don’t know” for each scenario is not shown.Source: 2013 State Street Insurance Survey CORP-0741Very likely Somewhat likelyInsurers hold mixed views about the future of regulation,but are optimistic about industry profit margins.7