Overview of the Insurance Industry
The insurance industry plays a pivotal role in the sustenance of the global economy by covering personal and business risk. Amid the variations in the growth rate, the insurance industry witnessed a considerable growth in the insurance premiums by an increase of 3.8% in 2015. Markets in Asia, North America, and Western Europe has been some of the major contributors towards this growth. Also, insurers are taking effective measures to re-orientate their offerings to rebalance their product portfolios and enhance their business offerings. Although the insurance industry is witnessing a promising growth owing to the increasing rates and reducing regulatory hurdles, several factors may challenge the growth of this market in the coming years. These include:
Relative advances in technology: New technologies may disrupt the traditional model of insurance. With rapid changes in innovations, insurers are under pressure to revise their internal operations and business strategies to stay relevant inspite of the competitors.
High penetration of cyber risks: One of the biggest challenges for the insurers is to assess the impact of threats on the company. As cybersecurity breaches can remain undetected for a considerable time frame, it will further affect the customers and other stakeholders. The growing concerns on the concentrations of cyber risk and further, the ability to offer real protection to the clients will affect the growth of the industry over the years.
Aging workforce: The average age of the workforce has increased, and organizations are witnessing a large number of retirees within a stipulated time. To counter this, prominent organizations are facing immense pressure to invest in talent and further manage age concentrations to ensure stability and maintain balanced production.
The Business Challenge and Journey
The client, a leading insurance company, wanted to draft a cost-model analysis model to identify the cost elements for the services rendered. The client also wanted to assess the impact of each cost driver on the overall cost of the services. Moreover, with the help of cost model analysis solution, the client wanted to point out the gaps that need to bridged to increase the uptake of costs. The primary concern for the client was to compare the costs of the services and efficiently utilize their resources to meet the needs of the target audiences. The cost model analysis should also focus on the comparison of models to improve the competitive position of businesses.
To help the client evaluate the potential costs and revenues, the cost model analysis experts at SpendEdge carried out an extensive research methodology comprising interviews and discussions with prominent stakeholders in the insurance industry. To gain a comprehensive edge on the costs, SpendEdge’s cost model analysis experts also compiled information across a wide array of secondary information including company presentations and industry forums in the insurance industry.
SpendEdge’s cost model analysis helped the company in the insurance industry effectively assess the impact of each cost driver on the overall cost. The client was able to collect data based on pricing through quantitative cost modeling and scenario-based cost modeling. The client was further able to recommend on the lowest cost mix and reduce insurance operation costs to the minimum.
Key questions answered in this spend analysis engagement include:
The cost model analysis offered by SpendEdge helped the client gain a comprehensive image of the cost developments in the insurance industry. The client was able to consistently reduce costs over time and enhance their operational efficiency. Moreover, the engagement also had a significant impact on the policy issuance, administration, and claims in the insurance industry.