Top insurers around the world share common ground when it comes to their customers—they keep them at the heart of their business. In order to instill this customer-centric approach to service across their business, top insurers share attributes that can carry them through strong economic headwinds.
KPMG mapped the characteristics of top-performing insurers to uncover the traits that make insurers outperform in uncertainty. These are explored in The Valued Insurer. This new publication builds on its predecessor, The Intelligent Insurer that examined dominant forces impacting the industry over the next 20 years.
"In a post-crisis environment, characterized by low interest rates and equity market volatility, insurers are focusing on sustainable growth more than ever before," said Frank Ellenbürger, Global Head of Insurance, KPMG in Germany. "This renewed focus is under the constraints of the "new normal", a volatile, low yield environment where insurers have to exhibit specific attributes to differentiate themselves and rise above the competition."
The Four Attributes of The Valued Insurer
The Valued Insurer looks at the attributes needed to succeed as an insurer in today's complex economy. KPMG found the firms who are the most profitable put their customers at the heart of their business.
A relentless customer-orientation is the core element of the attributes that KPMG has identified that contribute to sustainable superior performance which are:
1) Focus: Top firms have charted a precise course with a long-term view - an articulated and clear strategy that reflects their vision and specialization.
2) Efficiency: The most successful insurers have embraced a culture of continuous operational efficiency, establishing scalable, low cost models and invested in systems and processes to resolve inefficiencies.
3) Agility: From the boardroom to the back office, successful insurers demonstrate flexibility to adapt swiftly to a shifting environment across their entire organization.
4) Trust: Top insurers have found ways to attain or regain confidence and trust, through genuine, far-sighted efforts that build constructive relationships with mutually beneficial goals for all stakeholders including customers, regulators and investors.
Creating Value in Uncertain Times
"Valued insurers charted highly individual paths, incorporating their own distinct combination of these characteristics," said Mary Trussell, Global Insurance Focused Markets Lead, KPMG in the UK. "KPMG’s investigation demonstrated that these attributes, combined with the goal of delivering value to the customer enabled each firm to outperform in difficult times and create organizational capacity to succeed, even in challenging times. In particular, the insurers with these attributes have the capacity to withstand a prolonged period of low interest rates and equity market volatility."
From Theory to Practice
Growing use of mobile technology means opportunities for face-to-face sales will decline, making it more challenging for insurers to know their customers. It will be crucial for insurers to leverage segmented customer data and use predictive analytics to address their customers’ needs.
In an environment where competition is becoming even more intense, insurers will need to pair their winning attributes with their customer-centric business model to:
- develop differentiated propositions targeted at particular market segments
- focus on improving persistency to reduce pressure on new business volumes
- differentiate their brands through enhanced customer service
- maximize value.
The Paradigm for the Valued Insurer
To prepare for the road ahead, KPMG has developed the paradigm of The Valued Insurer to help explore what insurers need to do to position themselves for profitable future growth. To deliver a customer-centric business model, KPMG recommends insurers build their business on the following four pillars:
1) Better knowledge of customers: Understand the needs of customers and develop propositions to match. Use predictive analytics and propensity modeling to target and cross-sell.
2) Relevant propositions at the right time: Sell based on customer needs to secure customer loyalty, referrals and retention. Be prepared for consumer-focused regulation.
3) Optimal distribution for each customer segment: Understand how customers want to buy and align to distribution strategies. Optimize the cost of acquiring customers based on the value of the product they are buying.
4) Optimal servicing for each customer segment: Understand how customers want to be serviced and through which channels. Promote a positive customer experience at every touch point.
The time required to gather customer perspectives, refine propositions and go to market spans more than a few quarters. However KPMG believes those insurers focused on long-term sustainable value creation will be rewarded by their investors and positioned as valued insurers.
About The Valued Insurer
Analyzing the performance of insurance firms from the FT Global 500 over a 12 year period, KPMG identified 12 life insurers and 14 non-life insurers who consistently outperformed their competitors. While there were some commonalities in business strategies, The Valued Insurer distilled consistent attributes among these companies that certainly contributed to their results. While one overarching characteristic is no great surprise – a consistent orientation or refocus by these firms around their end customer –these key attributes merit careful contemplation.
Review the complete publication.
About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG is a strategic member of the World Economic Forum.
For further information:
Kent Miller Global Communications
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Meredith Evans Global Insurance
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