Risk, revenue, regulation, and retirement will be the topdrivers of change for insurers in 2009, according to TowerGroup, aresearch and advisory firm.

These four areas will test insurers' abilities to react to amarketplace that is being assaulted by crises. Specifically,TowerGroup said that risk and regulation will be at the forefrontas insurance carriers focus on initiatives to optimize riskmanagement and meet new regulatory mandates. Increased costs anddecreased revenues will lead to further industry consolidation andredistribution of assets. Lastly, as a large number of experiencedinsurance workers reach retirement, the strain on insurers willincrease as decades of knowledge departs.

Proper implementation of technology by insurers has always beenviewed as essential by TowerGroup, and this study reflects thatmentality. In claims, this involves adopting technologies such aspredictive analytics, which can help guide less experiencedadjusters in making sound judgments by using past decisions as aguide. TowerGroup strengthened this call to action by stating thatcarriers that fail to implement predictive technology will seesignificant deterioration in their results as well as plummetingloss of competitive position.

“The convergence of several negative economic influences hasresulted in unprecedented financial pressure on insurancecarriers,” said Karen Pauli, a research director in the TowerGroupInsurance practice, in a release. “Although these challenges areclearly daunting, it is critical that carriers maintain a long-termvision despite the short-term economic imperatives. Carriers thatfocus both financial and human resources at the enterprise level,incorporating both operational efficiency and risk management, willcome out of the current crisis ahead of the pack.”