Emerging Markets are attractive expansion destinations for insurers from mature markets as most are under-tapped and in dire need of expertise. These markets help insurance companies mitigate risk within their businesses as well as provide growth platforms.
Mature-market companies have the in-house knowledge and resources to bring insurance expertise to emerging markets. Interestingly, several mature-market companies have realized the uniqueness of each of these markets and are now catering to these opportunities with very customized solutions. Some also have taken their insights from developing markets back to their home grounds to launch newer products and services.
The risks of operating in new markets include redesigning the go-to-market strategy, to an extent or entirely, as several of these are very unique markets requiring a rethink of product, distribution, sales and servicing strategies. Regulatory risks vary from country to country, and most have an evolving regulatory framework. There also are financial risks associated with investment regulations. Technology, suitably deployed, can help carriers with quicker and more cost-effective turnarounds in their product, distribution and servicing strategies.
Actuarial, distribution and customer relationship management technologies are the key strategic enablers in emerging markets. Most foreign carriers operating in the Indian market have been able to migrate 30 percent to 40 percent of their mature-market technologies. But while hardware architecture is easier to migrate, applications architecture oftentimes requires customization at the country level.