The global economic recession that has followed the COVID-19 pandemic is set to challenge and disrupt the insurance industry for the foreseeable future. We can’t continue to work as we have in the past. We have to embrace new technologies and ways of doing things, applying our learnings from past recessions.
However, the patterns we can observe from previous recessions appear to be time-tested and consistent. That gives insurers entering this recession an additional advantage. By extrapolating from what has worked in the past, insurers can implement customized strategies that will allow them to outperform. While the future may seem uncertain and daunting, it is possible to emerge stronger from the recession with smart strategic plays.
The challenge facing insurers
In order to adapt and thrive, insurers have to make big, lasting changes. These include:
Structural cost reduction
This requires a fundamental shift in how work gets done. Insurers can automate manual tasks or restructure workflows, breathing new efficiencies and life into their teams.
Strategic reinvestment of savings
Once insurers have taken care of their existing processes, there is also the possibility of investing for innovation and growth (e.g new distribution channels and partnerships.) New technologies and innovative investment can help minimize the business impact from an economic downturn and drive future growth.
Partnership helps insurers adapt faster
Change might be daunting, but you don’t have to do it alone. Insurers have access to two important external influences in their post-recession recovery: the strategic input of consultants such as Accenture, and the innovation opportunities brought on by ecosystem partners.
Take the case of an Italian financial services company that was eager to adapt to the rapidly changing market landscape in the wake of 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 in understanding how the market was shifting, their changing customer base and what interventions would be needed to respond to these trends. Underpinning the partnership was the desire to be more resilient and take advantage of new opportunities, rather than just survive.
The opportunity to analyse and strategically plan for the future allowed our client to plan their strategic steps over the next 1-2 years. Out of 25+ recommendations to respond to the changing landscape, their prioritized four of them, including a focus on its motor business.
In another collaboration with Zurich, we worked to drive digital transformation with initiatives intended to develop new ecosystems in the mobility, retail and utilities sectors, creating new ecosystems adapted to new consumption habits. The goal is to boost the digital business of the Zurich Alliances area and achieve a turnover of 100 million euros over the next three years. Zurich has different digital solutions and service platforms, unique in the insurance market such as Zurich Klinc. The collaboration with Accenture will boost the connection between company and final distributor. Zurich and Accenture have a long-standing collaboration on the company’s digital transformation with successful initiatives, such as the launch of Zurich Klinc, the range of on-demand insurance for digital devices that has enabled the company to attract Millennial audiences.
The key to recession recovery is to use each challenge as an opportunity for reinvention. With a focus on partnership and innovative plays, it is possible for insurers to more competitive than before.
Contact me to discuss how to partner and build your business’s recession response.
Read the full Insurance: Strategic Plays for Recession Recovery Report.