The ability to innovate by way of distribution and management and through the use of technology will distinguish `the winners' of tomorrow in today's ever expanding and highly competitive global insurance marketplace.
The pressure from competitors, such as banks, pension funds, and mutual funds, represents a major challenge for insurers. The `golden age' is over. To compete, insurers must improve their competitiveness through better management of their costs and increasing their financial expertise in order to meet client needs, innovate through use of technology, services and products.
As a direct consequence of the private carriers entering the Indian market, there is a perceptible trend towards value addition and product distinction in the insurance sector. As this trend accelerates, as it did in banking, insurers must be highly sensitive to wherealong the value chain of origination, underwriting, packaging and distributioncan they add the most value. Hence, the need to appreciate what aspects of today's business model create the most value for stakeholders and customers, which turf should be defended and what new value-creating business opportunities might emerge. In the past, insurance companies were driven by sales, concentrating on premium growth in much the same way that bankers once focused on asset growth.
The key to maximizing value for stakeholders is to emphasize those activities that create value, while reforming and downscaling the activities that destroy values. To pursue this opportunity, management must adopt the correct measurement tools to allow these to be identified, and put in place the correct management processes to ensure that the organization capitalizes on them. Innovation is one such key process. Let us look at how it can help redefine stakeholder value.
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