The Lone Cry for Growth In Insurance?

Yee Hah! The worst recession since the Great Depression was declared officially over in June of 2009. We should be feeling great, since all things considered, the insurance industry fared pretty well when it came to how it emerged from that dark tunnel. But except for one notable role voice, insurers, unlike their banking peers, are still holding back from growing the business. How do we know? We took a look at nearly 5,000 inquiries that Forrester answered for insurers, bankers, and securities firms in the wake of failure of Lehman Brothers to just after this May’s Flash Crash.

What was on the minds of insurers during these six quarters? For starters, insurers:

  • Asked more questions than their financial services peers. Of the three segments we looked at, insurers asked half of the inquiries we fielded—2,500 versus nearly 1,600 and 600 for banks and securities firms, respectively.
  • Framed more than half of those questions around risk. Insurers didn’t veer away from what got them through the recession intact (indeed, from the very nature of their business)—managing risk. Even questions about application development strategies were framed as a risk question, with most insurers seeking validation that they were following in the well-worn grooves of others in insurance (and other industries) before them.
  • Posed too few questions about growing the business. Unlike their banking and securities siblings who asked questions about growing the business through new product launches, up-selling and cross-selling, or luring new customers away from competitors, insurers, with one big role-based exception, did notreflect that Q2 2009 economic inflection point.

So, just who cared about growing their insurance employers’ businesses? No surprise, it's the role that’s empowered (or should be) to deliver top and bottom line business outcomes—the ebusiness and channel strategy professional. Interested in just what this role asked compared to the rest of the insurance industry or what topped the charts for bankers and securities firms? Forrester clients can learn more about what was on the minds of the three financial services segments through January of 2009 to the end of June 2010 in our inquiry analysis published last week.

Comments

My Observation

It has been my observation that banks tend to focus on increasing revenue and insurance companies focus more on reducing costs. Both are understandable considering their respective business. You post would indicate that perhaps insurance has it right going into a recession while banks have it right coming out.

It also seems that banks look more at the total bottom line while insurance companies seem to focus more on verticals. While I think insurance is short-sighted in doing that, perhaps they are better positioned for the long haul?

Multiple postings on insurance risk this week

Ellen, this must be a hot topic as its the third piece I've read today that highlighted how insurance companies are looking to push the envelope in terms of risk management. Donna Prestwood's blog (link below) notes a similar rise in inquires as it relates to Solvency II (which I believe most impacts firms that do business in Europe). If interested, http://ebs.pbbiblogs.com/2010/10/06/what-does-it-take-to-model-risk/