These are extraordinarily difficult times for insurers to grow their business, with the United States and Europe struggling to jump-start their economies and a double-dip recession still not out of the question.

But the economy isn't the sole obstacle confronting carriers. They also face the more fundamental need to change how the industry does business to meet rapidly evolving consumer expectations in terms of products, distribution, service and technology.

To succeed in this demanding environment, insurers will need to come up with creative strategies to generate growth. At the same time, they must keep striving to improve operational excellence to squeeze costs out of the system and adapt to regulatory reforms.

The pressure is also on for insurers to differentiate themselves in a very competitive market by driving innovation in products and services, defending their brands and winning the war for talent.

These are achievable goals and worth pursuing since insurers cannot afford to merely hunker down and wait for a broad economic rebound to boost their bottom lines. Therefore, companies should stay on the offensive by rethinking and reshaping the status quo so they can excel no matter what state the economy is in.

While achieving growth, operational excellence and innovation in such a difficult economic and competitive environment might be easier said than done, opportunities are available for insurers that seize the moment to keep growing throughout what could turn out to be a very difficult decade ahead.

1. New Customers, Greater Market Share

One option is to attract new customers, as well as take market share away from competitors, by tweaking existing products and launching new ones. On a broader basis, carriers can re-evaluate their distribution systems, revisit their marketing strategies and consider reinventing their customer experience.

2. Foreign Expansion

Another possibility is to expand into emerging markets. With the United States and Western European economies failing to deliver consistent, large-scale growth, it's only natural for insurers to consider potentially greener pastures in faster-growing countries, including giants such as China, India and Brazil, as well as smaller economies with upside potential such as Colombia, Indonesia, Turkey and Vietnam.

While there are often obstacles to overcome in foreign markets—including local regulatory hurdles, infrastructure and distribution challenges, and tax considerations as well as cultural differences—the need for insurance coverage to meet the financial-security demands of an expanding middle class and private-sector business community could provide significant growth opportunities for those with the resources and capabilities to capitalize on them.

3. Mergers & Acquisitions

A third option is to expand by merging with or buying other carriers. Indeed, the time appears to be ripe for more consolidation in insurance, which still suffers from excess capital, bargain pricing after years of cuts in P&C rates, and low returns on investment.

Merger volume was seen as on the rise in 2011. Deals tended to be bolt-on acquisitions, with buyers adding new product lines and distribution channels as well as expanding their geographic reach into emerging markets internationally. Sellers, on the other hand, shored up their bottom lines by divesting non-core or underperforming books of business and subsidiaries while withdrawing from foreign markets where they lacked sufficient scale.

Still, with more carriers undergoing strategic reviews for potential M&As of late, the stage is perhaps being set for an uptick in bigger deals in 2012—particularly if organic growth remains as challenging as is expected over the short to medium term.

No easy answers exist for insurers looking to grow their business in this difficult environment. Whether a carrier chooses to launch a new product line or reinvent an existing one; expand abroad through a joint venture or acquire an existing operation closer to home; add a new technology in-house or enhance their tech capabilities via a third-party cloud; branch out with a new distribution system or revamp the one they already employ—there will be obstacles to overcome and risks to take.

The main ingredient is a willingness to remain proactive rather than just maintaining the status quo and hoping for overall economic conditions to improve. While the economy no doubt has a major impact on insurer growth, carriers need not wait for a rising tide to lift all boats.

Special Reports /

Generating Growth in Tough Times: 3 Ideas

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