A recent study on the life insurance industry by Ernst and Young predicts a continued underutilization of modern trends in digital sales technology needs. According to research and experts on the subject, life insurance companies that do not prioritize a shift toward a more innovative corporate culture may be left behind as new, more streamlined competitors take the lead.
In a summary of its findings, the EY study noted that insurers will begin the new year in generally good financial health, but this may be tempered by rapid changes in the way business is conducted. In addition, new regulations and a persistently sluggish economy will serve as further impediments to growth over the next year. EY recommended life annuity firms take the opportunity to invest in growth while they can.
In their detailed suggestions for how the life insurance industry can adapt to the changing tides, EY outlined six major steps companies must take to capitalize on growth opportunities and maximize earning potential, all while delivering an exceptional customer experience and growing their talent pool in the face of overwhelming adversity in these areas. According to the authors of the report, the companies that can achieve these objectives in a reasonable time will reap the benefits of a more productive workforce.
Fostering a culture of innovation
The most successful companies today are the ones that listen to even the craziest ideas and decide to act on them rather than ignore them. EY said as much about the life insurance industry, which “has never been considered highly innovative or nimble,” according to the report’s authors. To improve in this area, life insurance industry leaders must begin to foster and continue to maintain a culture of innovation within their organizations if they want to see measurable and sustained growth. EY noted that long-term growth must be emphasized over short-term wins, which means embracing even failed projects as opportunities to learn and improve. Providers can spur innovation through greater experimentation, particularly by breaking down barriers between departments. An environment of open information is often the best one for creative thinking and effective problem solving.
Standing out among the pack
In last year’s market outlook, EY cited a study by Conning that found only marginal growth in the life insurance industry over the last four years. According to the study, “Life Annuity Forecast and Analysis,” average returns on statutory surplus grew only slightly since 2012, and premium profits posted only modest gains. Blaming increasing competition within the life insurance and annuities market, EY urged industry leaders to devise a plan to differentiate their organization from the glut of providers that now exist. This can be achieved if companies embrace rapid market change, as well as advanced analytics technology, to optimize their business model and see real growth instead of the stagnation that has become normal. Providers should invest in new IT platforms that may not have been updated in ages, and consider forging alliances with experts in this field to gain deeper insights and move the needle on growth rather than languishing.
The widening talent gap
All of these solutions sound straightforward, and for the most part they may be indeed. However, they are next to impossible to achieve without the right talent, and according to the EY study, the life insurance and annuities industry is experiencing a shortage of ability in key areas. Providers must compete for talent for talent by going beyond branding, or even financial incentives. Data scientists and software engineers value autonomy and flexibility above much else, and offering these perks will help bring in people who are as innovative as they are productive. EY also emphasized building a company where diversity is championed to maximize cohesiveness and high-level growth within an organization.
In such a competitive landscape, the cards may indeed be stacked against life insurance professionals. By setting a course for measurable growth through dogged innovation and a willingness to learn from mistakes, EY predicts companies can soar ahead of the pack even in the face of adversity. A new year brings new opportunity, and business leaders who capitalize on it stand to see big rewards in the near future.