In spite of the uncertain economic environment and limitedinvestment income opportunities, property & casualty insurerswill be able to pursue growth opportunities in 2013 throughacquisitions, international global expansion, and product solutionsthat target new insurable risks and coverage, predicts Ernst &Young in its Global Insurance Center U.S. Property-CasualtyOutlook.

“Outperforming competitors will require insurers to maximizecustomer profitability and persistency by continuing to invest ininfrastructure, systems, intellectual capital, and technology,”says David Hollander, Global Insurance Advisory Leader at Ernst& Young LLP. “Insurance carriers can seize growth opportunitiesby improving analytical and decision-making capabilities,cross-selling products, and using marketing data to increasecustomer retention and encourage business expansion. Growth andprofitability strategies need to be developed across the enterpriseand balanced against the risks they may produce.”

Ernst & Young believes the following market forces willdrive U.S. property-casualty insurance companies' priorities overthe coming months:

• Invest in the business for the long term, as a responseto the difficult investmentenvironment. Consumers increasingly look totechnology-enabled transformation to improve the insurance serviceexperience. They want real-time solutions that can be deliveredthrough mobile communication and other channels. Such expectationsare difficult to achieve without substantial insurance technologyupgrades that provide real-time insurance interaction withconsumers. Technology can also enhance operational efficiencies,increase underwriting productivity and contribute to betteroversight of the claims process. Early detection of potentialadverse claims through analytical capabilities can sharpen aninsurer's competitive edge, while yielding cost savings in times ofeconomic volatility.
• Prepare for changes in the regulatoryenvironment. In 2013, insurers will confront risingactivity from state and regulatory authorities focusing onstrengthening insurance solvency protection systems, such asSolvency II, the National Association of Insurance Commissioners'Solvency Modernization Initiative to view the U.S. insurancecapital adequacy system, and the NAIC's Own Risk SolvencyAssessment. To prepare and address regulatory pressures to enhancerisk management, insurers must increase their data management,reporting and analytical resources, and their organizations'ability to integrate risk data across disciplines. This may requireadditional investment in education and other strategies. Given thatmuch of the solvency framework is still in progress, insurers needto be flexible to stay on top of emerging regulatory trends, whilepreparing for escalating data, reporting and governancedemands.
• Exploit opportunities and address challenges with 'BigData.” Insurers have an opportunity tointegrate and leverage data capabilities across the entire valuechain, from distribution and underwriting to customer service andclaims. Explosive growth in the abundance and types and data, andthe speed with which it is delivered, demand a new companyoperating structure and enhanced governance systems to address datasecurity. Step one involves getting existing data managementcapabilities in order to extract meaningful information andintegrate data from multiple sources typically housed in variousfunctional areas. Insurers will need to invest in talent with theskill sets necessary to collect, analyze, disseminate and managemassive volumes of data.
• Identify growth opportunities and begin to executethem. Acquisitions are one way for insurers todiversify and expand by location, product or distribution source.Premium growth opportunities in the U.S. may derive from insuringnew or emerging exposures in cyber liability, nanotechnology andenergy. Meanwhile, by using marketing data to target thoseconsumers most likely to buy multiple insurance policies, insurerscan leverage opportunities to expand their businesses and increaseretention over the long term. Given the drawbacks to beingconcentrated entirely in one country, insurers can benefit byturning to emerging markets in Asia-Pacific and Latin America, thatoffer lower insurance penetration rates and potential for economicexpansion.