The survey queried more than 100 leading life insurers and property and casualty (P&C) insurers in 16 of the world’s largest insurance markets to better understand how they envision profitable international expansion in the current economic and financial turmoil. Among the study’s most significant findings:
- Three-quarters (75 percent) of respondents said they believe that the current economic and financial turmoil will offer more opportunities to grow outside of their home market in the next three years. In addition, when asked to cite drivers of their companies’ anticipated international expansion over the next three years, "spreading risks and balancing business cycles" was cited most often (77 percent of respondents), followed by "managing costs more efficiently" (74 percent).
- Increased competition is expected in emerging economies. More than eight out of 10 insurers (84 percent) from industrialized countries and nine out of 10 insurers (92 percent) from emerging economies said that emerging markets are a priority for them when expanding outside of their home market. When asked to select the regions in which they expect to invest over the next three years, respondents most often cited the “BRIC” countries of Brazil, Russia, India and China (selected by 48 percent of respondents), followed by other Asian countries (43 percent) and Western Europe (36 percent). Within the BRIC countries, China was cited most frequently, followed by Brazil, India and then Russia. When asked to identify drivers for international expansion, respondents from emerging markets most often cited taking advantage of attractive stock prices as an opportunity for mergers and acquisitions (cited by 64 percent of respondents in emerging markets).
- Carriers will seek better global integration to manage operations across several countries and/or regions. More than four in five insurers said that, to make their international expansion more efficient, they are currently undertaking or plan to implement changes to their back-office capabilities (cited by 82 percent of respondents) and are implementing or will implement changes to their information technology infrastructure and services (cited by 81 percent). In addition, while only 13 percent of respondents said they currently use a globally integrated operating model — where strategy and operations are managed globally in an integrated fashion — 20 percent of respondents said they plan to use such a model within the next three years.
"Stock-market volatility, changing consumer-buying behaviors and the economic situation are increasing competition and the challenges to achieving profitable growth," said Serge Callet, managing director of Accenture’s Insurance practice. "Having already maximized their domestic footprints, carriers are looking to emerging markets, where premium growth is significantly higher because of catch-up dynamics. However, to generate profitable international expansion, insurers will need to accelerate product innovation, drive new levels of operational efficiency, and increase the simplification and standardization of their internal operations across entire regions. In this context, the execution of a sound expansion strategy will make all the difference."
Accenture commissioned a quantitative survey of 104 international insurance companies around the world, including 51 P&C insurers and 53 life insurers, with more than US$1 trillion in total combined premiums. The telephone survey was designed by Accenture and was conducted by Kadence Ltd from December 2008 through April 2009, at the time where the financial services industry was facing one of its deepest crises ever. Respondents were C-level executives involved in the decision-making process for investments related to the international expansion of their companies; The 104 respondents included 28 from the United States; eleven from Italy, nine from the United Kingdom, eight each from Spain and South Korea; seven from France; six from Australia; five each from Brazil, China and Japan; four from Denmark; two each from India, Germany and Switzerland; and one each in Singapore and Finland.
Accenture is a global management consulting, technology services and outsourcing company. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. With approximately 180,000 people serving clients in over 120 countries, the company generated net revenues of US$23.39 billion for the fiscal year ended Aug. 31, 2008. Its home page is www.accenture.com.
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