So what are you doing in this recession?
In August, much to the surprise of their own governments, economic data suggested that France, Germany and Japan had exited the recession. Similar good news has yet to be heard in the other major economies, but Celent’s recent research about perceptions and attitudes of insurers in this recession does show that there is increased optimism in the world of insurance.
Over the course of the first half of the year, insurers have made more progress in implementing tactical responses to the current recession. Around 80% have already or are in process of freezing discretionary spend and travel. Two-thirds have are in the process or have already cut staff salaries. But these tactical responses dont inspire.
In our new upcoming report on the impact of the recession, we added a new question trying to get at the strategic response of insurers. In quarter one, the outlier was a change in strategy, with only a quarter of respondents having done this -- a clear reflection of the severity of this measure both on long-term capacity and the difficulty to execute. By mid-year, almost half had undertaken this difficult task. The other area with the most noticeable change was that of budgets. By the end of the second quarter, almost two-thirds of insurers had undertaken or were in the process of revising budgets.
Streamlining of processes is the top area of focus and is already underway or completed in 77% of respondents. The second area with a high level of activity is divestment of assets. A return to the focus on core business is a response to be expected in difficult times, and 70% of respondents had undertaken this option.
Outsourcing is also on the agenda. Responses indicate a higher frequency of business process outsourcing to IT process outsourcing. This is probably attributed to the already high level of IT process outsourcing in the industry. Almost half of respondents have already outsourced business processes and another fifth are taking this under consideration.
There are a large number of insurers considering or undertaking the launch of a new product or a new channel. Over 50% of respondents are in discussions or already doing so. Launching into a new geography and acquiring new company assets are strategies that appear fairly low on the list of priorities.
So the question to your business is what are you doing in this recession? Many insurers clearly see some opportunities in these difficult times and such innovative and progressive strategies are clearly going to put them ahead of the pack when time improves.