Of insurance chief executive officers surveyed, only half believe their enterprises are adequately prepared to handle a highly volatile, increasingly complex business environment, according to a survey released by Armonk, N.Y.-based IBM.
IBM said at the ACORD/LOMA conference in Las Vegas that 68 percent of the insurance CEOs surveyed expect the level of complexity to grow significantly over the next five years, but just 53 percent believe they know how to deal with it successfully.
Eighty-two percent of insurance CEOs cited increased government regulation as a major source of uncertainty in the new economic environment.
Based on in-person interviews conducted by IBM consultants, the "2010 IBM CEO Study" reveals that chief executives in the insurance industry believe that--more than rigor, management discipline, integrity or even vision--successfully navigating an increasingly complex world will require creativity, which emerged as the number one leadership competency.
The study is the fourth edition of IBM's biennial Global CEO study series. Between September 2009 and January 2010, IBM said it interviewed 1,541 CEOs, general managers, and senior public sector leaders, including 78 insurance respondents from 28 countries.
"For insurance CEOs, avoiding complexity is not an option--the task is to figure out how to respond to it," Mark Lewis, general manager, IBM Insurance Industry said in a statement. "The effects of rising complexity call for CEOs and their teams to lead with bold creativity, to connect with customers in imaginative ways and redesign operations for speed and flexibility."
The survey found that 55 percent of insurance CEOs are focusing on simplifying their products and operations to manage complexity more effectively. In fact, insurance CEOs beat the sample population average of 48 percent for simplifying products and processes.
The study also revealed that insurance CEOs are comfortable dealing with ambiguity. Surprisingly, executives are skilled at driving change in the organization to stay ahead of the market, using a wide range of communication styles and rules, according to the study.
For example, 64 percent use iterative strategic planning processes (an ongoing review) as distinct from formal annual strategy reviews, although only 27 percent--slightly less than the global average--favor quick decisions.
In terms of leadership styles, insurance CEOs rely less on hierarchical styles of leadership. Sixty percent tend to persuade and influence rather than to command and control.
Senior executives in the insurance sector are prioritizing customer centricity as never before, the study found. A resounding 90 percent of insurance CEOs put getting closer to customers at the top of their agendas.
IBM said its research has found that the most successful organizations will co-create products and services with customers, as well as integrate customers in their core processes.