The global economic recession that followed the COVID-19 pandemic will challenge and disrupt the insurance industry in the foreseeable future. We can not continue to work as in the past. We need to apply new technologies and ways of doing things and apply our learning from previous recessions.
However, the patterns we can observe from previous recessions appear to be time-tested and consistent. This gives insurers entering this recession an added benefit. By extrapolating from what has worked in the past, insurers can implement customized strategies that enable them to perform better. While the future may seem uncertain and frightening, it is possible to emerge stronger from the recession with clever strategic plays.
The challenge facing insurers
To adapt and thrive, insurers need to make big, lasting changes. These include:
Structural cost reduction
This requires a fundamental shift in how work is done. Insurers can automate handles or restructure workflows, thus blowing new efficiency and life into their teams.
Strategic reinvestment of savings
Once insurers have taken care of their existing processes, there is also the opportunity to invest for innovation and growth (eg new distribution channels and partnerships.) New technologies and innovative investments can help reduce the impact of the business due to an economic downturn limit the minimum and drive future growth.
Partnership helps insurers adjust faster
Change can be daunting, but you do not have to do it alone. Insurers have access to two key external influences in their recovery from the recession: the strategic input of consultants such as Accenture, and the innovation opportunities offered by ecosystem partners.
Take the case of an Italian financial services company eager to adapt to the rapidly changing market landscape following the COVID-19 pandemic. They partnered with Accenture to provide an in-depth medium-term analysis to determine the COVID-19 impact on its insurance business. This included support to understand how the market was changing, their changing customer base and what interventions would be needed to respond to these trends. The basis of the partnership was the desire to be more resilient and seize new opportunities rather than just surviving.
The opportunity to analyze the future and plan strategically enabled our client to plan their strategic steps over the next 1-2 years. Of the 25+ recommendations to respond to the changing landscape, they prioritized four of them, including focusing on the automotive industry.
In another collaboration with Zurich, we worked to bring about digital transformation with initiatives aimed at developing new ecosystems in the mobility, retail and utilities industries, creating new ecosystems adapted to new consumption habits. The aim is to promote the digital business of the Zurich Alliances area and achieve a turnover of 100 million euros over the next three years. Zurich has various digital solutions and service platforms, unique in the insurance market such as Zurich Klinc. The collaboration with Accenture will promote the connection between enterprise and final distributor. Zurich and Accenture have a long-standing collaboration on the digital transformation of the enterprise with successful initiatives, such as the launch of Zurich Klinc, the range of on-demand digital device insurance that has enabled the company to attract a millennial audience.
The key to recession recovery is to use every challenge as an opportunity for reinvention. With a focus on partnership and innovative plays, it is possible for insurers to be more competitive than before.
Contact me to discuss how you can form a partnership and build the recession response of your business.
Read the full Insurance: Strategic Plays for the Recession Recovery Report.