|
|
Wednesday, 17th April 2024 |
| Perils highlighted of insurers’ move to broad financial services |
Back |
| Property and Casualty insurers face daunting challenges in widening their product ranges |
According to the results of a survey conducted by PricewaterhouseCoopers and the Economist Intelligence Unit, Property & Casualty (P&C) insurers planning to diversify into the broader financial services arena may have to consider alliances and mergers in order to adapt to the challenges of the new environment.
The recent joint report, ‘Property & Casualty: Mapping the Future’, based on a global survey of 210 senior P&C insurance executives, found that over 49% plan to offer a broader range of financial service products by 2005, an increase from 24% at present.
At the same time, barely 7% of respondents believe that customers will want to buy multiple financial products from non-life insurers, preferring instead banks or non-affiliated sources.
According to Chand Kohli, insurance leader at PwC in Ireland, ‘Insurers need to think strategically about the choices that lie before them and how best they will be able to compete. Not all companies will be able to succeed in the broad-based financial services arena, particularly against existing financial organisations with more established brands.’
‘Some companies may choose an alliance as an effective way to offer a wider range of products and services while others may find that they create the greatest value as niche players in very specialised product lines’.
The survey also found respondents believe that there are going to be a number of key factors that will reshape the industry. E-commerce will account for 16% of revenues in 2005 as opposed to less than 2% today. Also, only 10% of respondents believe that interactive TV, which is virtually non-existent today, will have the greatest influence on the market in five years. And close to 25% expect premium revenues to come from products created between now and 2005.
Kohli added, ‘To date, general insurers have focused on getting bigger and using their scale to do some of the things they have always done a little better. Now they are confronting the need to fundamentally reinvent themselves - and not all of them will retain their independence’.
Other key findings of the survey were:
• Respondents expect revenue from independent agents and brokers to fall from 63% to 50%
• 75% of insurers with more than $1 billion in annual revenues expect at least some of their revenues to come from overseas.
• 42% of respondents believe claims handling is one of their top two core skills today; only 27% believe it will be essential in 2005. |
|
| Article appeared in the April 2000 issue.
|
|
|
