As many insurance company CEOS are uncertain about the ability of their companies to handle an increasingly complex business environment as those who are confident about their firms’ capabilities, according to a survey by Armonk, N.Y.-based IBM that was released this week at the 2010 ACORD LOMA Insurance Systems Forum in Las Vegas. Only 53 percent of the insurance CEOs polled by IBM as part of its 2010 CEO Study said they believe their enterprises are adequately prepared to handle a volatile business environment.
Adding to the concern, 68 percent of the CEO respondents said they expect the level of complexity to grow significantly over the next five years, but just 53 percent said they believe they know how to deal with it successfully. Increased government regulation is a major source of this uncertainty, cited by 82 percent of insurance CEOs in the IBM study, which is based on in-person interviews conducted by IBM consultants. This is the fourth edition of the biennial Global CEO Study Series.
Navigating this increasingly complex business world will require some non-traditional, “out of the box” strategies, according to the survey respondents. Chief executives in the insurance Industry believe that – more than rigor, management discipline, integrity or even vision – successfully competing in this environment will require creativity, which emerged as the number-one leadership competency.
“For Insurance CEOs, avoiding complexity is not an option – the task is to figure out how to respond to it,” said Mark Lewis, general manager, IBM Insurance Industry, in a press release. “The effects of rising complexity call for CEOs and their teams to lead with bold creativity, to connect with customers in imaginative ways and redesign operations for speed and flexibility.” According to IBM, one way CEOs are trying to overcome complexity and yield competitive advantage is by redesigning operating models for speed and flexibility – taking advantage of global efficiencies while addressing local needs. For example, 55 percent of insurance CEOs polled by IBM said they are focusing on simplifying their products and operations to manage complexity more effectively – compared to 48 percent for all CEOs who participated in the study.
The study also revealed that Insurance CEOs are using a wide range of communication styles and rules in their efforts to stay ahead of the market. For example, 64 percent said they use iterative strategic planning processes as distinct from formal annual strategy reviews, although only 27 percent – slightly less than the global average – favor quick decisions. In terms of leadership styles, insurance CEOs appear to rely less on hierarchical styles of leadership; 60 percent said they tend to persuade and influence rather than to command and control; and 34 percent reportedly prefer managed viral communication to top-down communication.
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