Property-Casualty insurers focus on margin protection and stronger operating fundamentals to enhance performance in 2014: EY report

NEW YORK, Dec. 17, 2013 /PRNewswire/ -- In the face of continued economic, competitive and regulatory challenges, property-casualty insurers are seizing opportunities to improve underwriting discipline, drive operating efficiencies and leverage data and enhanced analytics to sustain growth and widen their performance advantage, according to EY's 2014 US Property-Casualty Insurance Outlook.

"Successful companies are in various stages of implementing a customer-centric business model that integrates internal technology to reach consumers," said David Hollander, principal, Ernst & Young LLP, and EY Global Insurance Advisory leader. "As closer alignment of technology with commercial objectives becomes a strategic imperative, insurers have an opportunity to invest in cost-effective systems for distribution, underwriting, product development and claims. Such investments can improve profitability in an increasingly price-competitive environment."

EY believes that U.S. property-casualty insurance companies must focus on these key areas to protect their margins and improve operating efficiencies in 2014:

  • Double down on broad-based, transformative technology with high ROI impact. In pursuing sustainable growth, insurers have a rare opportunity to broadly transform technology, replace core engines with integrated, cost-effective cloud-based systems, and improve operating capabilities. Improvement in the industry's core financial performance is being driven by a re-emergence of pricing and underwriting discipline. 
  • Adopt a complete range of enterprise data excellence. Insurers that improve data management and embrace the concept of enterprise data excellence will outperform competitors in 2014 and beyond. This requires investing in common enterprise intelligence standards and policies, and enhanced predictive analytics to optimize risk and capital analysis.
  • Invest in innovation of product development processes and delivery to meet rising demand for protection. As new risks and insurance needs emerge for consumers and the commercial marketplace, many companies are employing technology to enhance product offerings and customer-centric processes. They are also exploring approaches to risk management and mitigation that will necessitate new talent to drive changes in thinking.
  • Exploit segment differences for targeted growth strategies. Companies that exploit global, geographic, product and demographic pockets of opportunity will be ahead of the curve in growth and bottom-line performance. Nevertheless, fragility in economic recovery and the competitive environment is affecting these market segments: specialty markets and excess/surplus lines, workers' compensation, regional variances in growth and underwriting, alternative market structures and merger and acquisition activity.
  • Get out in front of emerging investment challenges. Insurers are seeking to diversify investment exposure and increase yields by incrementally expanding equity positions and lowering correlated alternative investment vehicles. Volatile investment performance is pressuring effective balance sheet management, driving a greater need to manage risk and capital.
  • Prepare for escalation of governance and accountability. Regulatory pressures like solvency-focused initiatives, accounting changes and federal oversight continue to add layers of complexity and uncertainty. The burdens of regulatory change will affect how companies organize data, choose technologies and implement processes. 

The complete Property-Casualty Insurance Industry 2014 Outlook report can be found at www.ey.com/insurance

About EY's Global Insurance Center
Insurers must increasingly address more complex and converging regulatory issues that challenge their risk management approaches, operations and financial reporting practices. EY's Global Insurance Center brings together a worldwide team of professionals to help you achieve your potential – a team with deep technical expertise in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately, it enables us to help you meet your goals and compete more effectively. It's how EY makes a difference.

About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

This news release has been issued by Ernst & Young LLP, a member of the global EY organization that provides services to clients in the US.

SOURCE EY



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