Most Big Insurers Plan Growth Overseas, Survey Finds

NU Online News Service, June 10, 3:45 p.m. EDT

A majority of large insurers in a survey said they are planning to expand internationally within the next 12 months despite the ongoing economic turmoil.

The poll released by the consulting firm Accenture, asked more than 100 major property-casualty and life insurance carriers in 16 of the world's largest insurance markets how they envision profitable international expansion in the current economic and financial turmoil.

Among the study's most significant findings:

o Three-quarters, 75 percent, of those surveyed said the current economic crisis will offer more opportunities to grow outside of their home market.

o Driving the anticipated international expansion over the next three years, 77 percent said they seek to spread risk and balance the business cycle. Seventy-four percent said they will seek to manage costs more efficiently.

o Eighty-four percent of industrialized countries and 92 percent of emerging markets said emerging economies will be their primary market for expansion.

Companies said the countries they would be most likely to invest in over the next three years were:

o The "BRIC" countries of Brazil, Russia, India and China by 48 percent. China was the most cited, followed by Brazil, India and then Russia.

o Forty-three percent said other Asian countries.

o Thirty-six percent cited Western Europe.

Sixty-four percent of respondents in emerging markets said taking advantage of attractive stock prices as an opportunity for mergers and acquisitions was a major driver for international expansion.

The carriers said they would seek better global integration to manage operations across several countries.

To make their international expansion more efficient, 82 percent said they are currently undertaking or planning to implement changes to their back-office capabilities. Eighty-one percent said they are implementing or will implement changes to their information technology infrastructure and services.

In addition, while only 13 percent of those polled said they currently use a globally integrated operating model (where strategy and operations are managed globally in an integrated fashion), 20 percent of respondents said they plan to use such a model within the next three years.

"Having already maximized their domestic footprints, carriers are looking to emerging markets, where premium growth is significantly higher because of catch-up dynamics," said Serge Callet, managing director of Accenture's Insurance practice in a statement.

He added that to generate profitable international expansion, "insurers will need to accelerate product innovation, drive new levels of operational efficiency, and increase the simplification and standardization of their internal operations across entire regions. In this context, the execution of a sound expansion strategy will make all the difference."

The survey of 104 international insurers included 51 p-c companies with more than $1 trillion in total combined premiums. Twenty-eight of the 104 respondents were from the United States.