The COVID-19 pandemic has led to a recession unlike what we have seen before. Although the severity of this recession has not yet been determined, we know that events in the global economy will affect the insurance industry. However, leading insurance companies around the world are responding with innovative answers that show that smart strategic games are still possible in this environment.
The current insurance context
Although we may not know the full depth of the global recession yet, it is clear that the COVID-19 pandemic has had a significant impact on the market value of insurance companies that have gained momentum much faster than previous financial crises. Specific lines, such as trade credit, inland shipping and compensation for workers, are particularly vulnerable, as are segments such as small and medium-sized corporate markets.
Accenture's latest report, Strategic Plays for Recession Recovery, looks at the sensitive mix of measures that previous outperformers have taken to remain stable during and out stronger after recession times. Evidence shows that insurers outperformed their peers in previous recessions through structural cost reduction and strategic reinvestment of these savings in core sources with competitive advantages to drive growth. In modern times, however, insurers need to apply unique, nuanced strategies.
Cost reduction strategies according to COVID-19
Current examples of cost reductions we see throughout Europe include:
- A UK based company optimizes services and increases its operational efficiency by moving to an intelligent operating model that combined data analysis, applied intelligence and human ingenuity
- An Italian insurance company optimized purchasing and radically changed the way source-to-payment services were delivered. This insurance company can now more effectively manage expenses, drive compliance and strengthen risk management.
We also see several examples to support the growth of insurance companies throughout Europe through new initiatives:
- In Finland, there are thousands of uninsured vehicles, resulting in millions in unpaid insurance premiums. Using blockchain technology, the Finnish Treasury created a vehicle identity platform that could potentially eliminate this problem.
Insurance companies also focus on customer service to further stimulate their growth. For example:
- A Finnish insurance company uses human-oriented research to better meet customer needs.
- A large Spanish insurance company reduces customer response times by using artificial intelligence.
Deciding if your next game is complex. Many leading insurance companies work with consulting companies to develop impact assessments of the COVID-19 pandemic in the insurance industry to identify opportunities in these uncertain new times. In the next post, we will show how strategic partnerships help insurers recover after the recession.
Contact me to discuss how you can build your company's recessionary response.
Read the full insurance report: Strategic games for recession recovery report
19659020] Disclaimer: This document is for general information purposes only and does not take into account the reader's specific circumstances and may not reflect recent developments. Accenture disclaims, to the extent permitted by applicable law, all responsibility for the accuracy and completeness of the information in this presentation and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, auditing or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed personnel.