If 2011 was the year of retrenchment, then 2012 is the year of the customer, finds PwC’s “Top Issues: The Insurance Industry in 2012.” Leading insurers are keenly focusing on improving the customer experience to differentiate themselves from competitors and expand their global market share.
The report also covers other key areas of focus, including international regulatory developments in risk and capital management.
Innovation is happening in all aspects of information, from capturing and interpreting to integrating and sharing. Innovation is enabling insurers to make better and smarter use of greater amounts of data, called “big data.” While personal lines carriers are further along in their use of technology, all insurance sectors have an opportunity to use big data and smart analytics, many for increasingly large and complex risks.
In these instances, big data will be used not only to automate, but also to enhance underwriting processes, reduce cycle time, facilitate better pricing, improve loss control and better inform decision making related to customer acquisition and retention.
“One of the largest challenges insurers will face in 2012 and beyond is capturing and interpreting data from a growing number of structured and unstructured sources, including but not limited to social media, policyholder behavior and telematics,” said Jamie Yoder, PwC’s US insurance advisory practice co-leader.
“Insurers that apply advanced analytical techniques to harness the power of big data will be better able to understand their customers, tailor products to meet their needs, and enhance the overall customer experience,” Yoder said.
Insurers are increasing their focus on emerging markets as an important part of their growth strategies. Growing populations and expanding middle classes have increased the demand for insurance. Insurers that are already in emerging markets are examining their footprints to ensure they are getting optimum growth and value from their investment.
“The rise of emerging markets is forcing insurers to re-think their current business models and go-to market strategies in these regions and countries. What works in one place may not work in another, and successful insurers are developing innovative products that meet specific customer needs in specific geographic markets,” according to Marie Carr, PwC US insurance advisory principal.
Insurers are making internal investments to meet regulatory demands and better manage risk. Many insurers expect to change the way they manage risk over the next year, as well as modify their capital structures.
More specifically, in preparation for the U.S. ORSA requirement, insurers are developing a more formal assessment of their ERM framework and risk management practices. Those with robust frameworks may find complying with the requirements less burdensome than those with less developed frameworks and infrastructures.
As standards across the industry develop, even more advanced organizations may need to make further investments to maintain a market-leading position, as well as fulfill increasing regulatory scrutiny of risk management.
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