Navigating today's challenging times requires courage anddetermination. But beyond that, it demands a focus on thecommon-sense business practices that have been the hallmarks of theinsurance industry since Benjamin Franklin formed the PhiladelphiaContributionship in 1752.

Now, with unsettling financial news available with every refreshof your Web browser, insurance companies are finding that, whilecurrent conditions call for creative answers, the most enlighteningsolutions are found in a four-step approach emphasizing thebasics--dealing with reputation, risk, reform and realignment.

o Reputation. It takes years to build, and seconds to lose!

One casualty of the current market downturn has been a loss oftrust and the sense of uncertainty about the future by theconsumer--a perception that can weigh down a company's ability tooperate successfully over the long run.

Leading insurers are discovering ways to win back the faith ofstakeholders with a top-down examination approach encompassingeverything from governance, resources and risk policies toreporting and training, among other factors. But a focus oncommunications is at the revival's center.

From the C-suite to the boardroom, to the audit committees,shareholders, employees, consumers and media, the industry appearsto be reaching out to key constituencies with clear, conciseinformation about situations as they unfold, thwarting false rumorsand inaccurate perceptions.

Beyond educating stakeholders and differentiating themselves inthe market, some leading carriers are also ramping up theircustomer experience management, knowing that insurers held in highesteem by the public tend to enjoy brand loyalty, expanded abilityto act as a one-stop-shop for customer services and productsand--because they are perceived as market leaders--attract toptalent.

According to a Forrester Research survey, the insurance industryhas been doing a good job in this area, but there is room forimprovement. The poll--which asked 5,000 consumers about theirinteractions with companies across several industries--revealedthat insurers came out near the top of the pack, with an overallCustomer Experience Index of 71 percent.

However, subset results showed that while customers may haveperceived insurers doing well overall, most found their experienceswere not "enjoyable," with a majority of the 14 carriers includedin the index having received "poor" or "very poor" marks in thiscategory.

A recent Gartner report supports this finding on customerservice, asserting that while stability and trust have been thrownoff track by financial market conditions, an increasedcustomer-centered focus can help financial services firms regainground.

This can be achieved by undertaking measures that include:improving access to accounts 24/7; reinforcing the perception ofthe company's financial strength and its ability to pay claims;investing in better customer experience management to retainclients; and looking outside the financial services industry forclues about how to do a better job with technology.

o Risk: It's time to embrace an enterprise risk managementculture!

Interest in ERM has risen in scope and breadth as recent eventshave demonstrated the critical role it can play in driving valuefor an organization by providing senior managers a 360-degree viewof exposure.

The holistic ERM risk assessment process has gained inpopularity in recent years, as companies have sought ways to manageall categories of risks, from existing assets to operationalexposures.

However, the current financial market turmoil highlights theimportance of having intense, comprehensive risk models to ensure acore focus on fundamentals, such as governance, transparency, riskidentification and control, and an embedded consideration of riskin the decision-making process.

For insurance, the effects of market turmoil have led to lossesacross the operational spectrum, including investments andunderwriting. But it has also created a unique opportunity forinsurers to adopt ERM processes and procedures. Efforts in thisarea now might lay the foundation for an improved reputation in thepost-crisis environment.

Results from a recent Towers Perrin survey show that, of 360industry principals responding, 52 percent of European companiesreport having a documented risk appetite. Conversely, only 40percent of North American insurers reported having the same.Twenty-three percent of North American firms said significant workis needed to manage market risk exposure, while just 7 percent ofEuropean firms believe the same.

Clearly ERM offers a competitive advantage as well.

o Reform: What you don't know will hurt you!

As 2009 will likely usher in significant regulatory reform,insurers are making it a point to be at the table early and oftenas events unfold, with discussions ranging from federal oversightof insurance to the fate of IFRS (International Financial ReportingStandards). They have a strong interest in ensuring that measurestaken by lawmakers strengthen the system without hampering itsability to serve the public.

Consider federal vs. state regulation. Of particular concern forinsurers is the prospect of extensive new regulation, with layersof new federal rules being hoisted atop existing statemandates.

Also up for consideration are fair-value accounting,principles-based reserving, Solvency II regulatory reform in Europeand IFRS--all of which will likely add to insurers' need forregulatory infrastructure.

o Realignment: Less is more!

Managing the current financial crisis will mean realigning byfocusing on the basics of the insurance business, which includeskeeping one's financial house in order, as well as refocusing onkey areas such as growth and cost reduction.

Also important are realignment strategies involving customerexperience and distribution management, both of which are drivenlargely by talent and technology.

As mentioned previously, customer experience management is beingused in marketing to retain current clients and attract new ones.But leading insurers are also embracing it as a way to betterunderstand and meet customer needs across segments.

One way is by working to improve distribution channels toincrease product offerings in a customer-friendly, no-hassle waythat encourages consumers to see their insurer as a one-stop-shopfor products and services.

Meanwhile, technology plays a major role in both growth and costreduction. It is in this area where smart companies are findingresults by replacing and/or upgrading legacy systems to improveautomation and data management.

Through predictive modeling, for example, data-mining techniquesare used to improve risk segmentation and portfolio management.This may lead to other benefits, such as increased market share andhigher retention of desired risks, along with profitable growth anddifferentiated servicing.

Information technology helps drive efficiencies through areassuch as claims management, call centers, agent/broker automationand customer experience.

While growth in IT spending is expected to decline in 2009, IT'sability to drive improved internal operations, organizationalprocesses and procedures, software use, and project management maybe cause for reconsideration.

Also serving to drive growth and cost reduction is a strongfocus on talent. From a recruiting standpoint, in today'senvironment, it is a buyer's market. People who carriers could notpreviously afford or attract are now looking for jobs.Forward-thinking firms are leveraging the current market conditionsin recruiting new hires and working to retain top performers.

Going forward, staying ahead of the game means much more thanjust responding to current conditions.

By being proactive in shoring up reputation, embracing the360-degree view afforded by ERM, staying smart about items such astechnology and upcoming regulatory changes, and striving to focuson the basic building blocks that made the insurance industrystrong, leading companies will likely position themselves to notonly prevail in weathering the current economic downturn, but tosecure competitive advantage going forward.