Five strategies for insurer success in 2012: Ernst & Young

Ernst & Young has identified five strategies that U.S. property and casualty insurers need to explore in 2012 to improve their chances of success.
“A low premium growth environment is expected to persist through 2012, adversely affecting insurer profitability and resulting in the fifth consecutive year of negative performance,” an Ernst & Young release says. “Furthermore, increased regulation will force insurance companies to measure risk in new ways, impacting their capital and risk management strategies.”
The five strategies include:
•Executing flexible approaches to manage uncertain conditions. An insurer’s operational capabilities, infrastructure and corporate culture must support flexible, rapid and well-governed decision-making, thereby assuring agile performance with accountability.
•Anticipating, understanding and addressing the impact of prospective regulations. Insurers that fail to appreciate the impact of regulations and new accounting standards could find that a potentially higher cost of capital may derail their competitive strength.
•Comprehending and acting upon changing insurance buying behaviours. Tomorrow’s customers’ characteristics, buying behaviours and risk profiles will bear little resemblance to those today. Identify, assess and capitalize on the changing characteristics to tailor products, services and distribution channels.
•Increasing investments in core systems to bolster growth and profitability. Faced with limited investment alternatives yielding an attractive return, insurers are investing in themselves to position their operations for growth and improved profitability.
•Applying business analytics to address difficult top-line growth conditions. Insurers that apply business analytics across the value chain can glean deeper information on customer markets, underwriting segment profitability and claims management.