Now that there are some faint but recognizable signs of economic recovery, it's appropriate for organizations to renew their focuses on growth. But developing and executing a growth strategy, while never simple, has become an extremely complex and often very risky process.
The traditional road to growth for mature industries such as insurance has been mergers and acquisitions, and the flurry of big deals announced in the past few months shows clearly that the most aggressive players view this strategy as the way to go in the 21st century (see related article "Technology and the Urge To Merge"). But making these deals work has become more difficult than ever. Technology-often viewed as a key M&A driver because of the opportunities to eliminate redundancies and achieve economies of scale-often proves to be one of the biggest stumbling blocks (thanks in part to human emotions).
Entrance into new markets is another route to growth. But in today's unsettled and often very dangerous world, the appeal of untapped markets is limited. Aon's Trade Credit and Political Risk practice group has calculated that uncertainty surrounding political risk cost the world economy more than $800 billion in reduced corporate spending, investments and growth in 2003. The group forecasts that the cost of political risk could reach $1 trillion in 2004.
That leaves the most basic channel to growth: Sell more. Insurers certainly don't need exhortations on this count, but simply raising agents' sales goals and coming up with lucrative incentive programs is not enough. A true, technology-enabled multi-channel distribution strategy is essential. But if that's a given, where's the competitive advantage?
Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio