Saturday, 22 November 2014 22:25
To Survive or Create New Product. That is the Question!
Due to the easy copying of the innovative works, the insurers cannot create sustainable differences with limited innovation and focus on “survival” strategy rather than new product.
2013 became a difficult year for the insurance companies in the emerging countries again. The requests received from the developed economies were again limited. Additionally, the declaration of the FED regarding the decrease of asset purchase in order to normalize the financial markets has caused decrease in value of the developing countries’ assets.
Though the economic growth in the insurance market was stable in 2013, when compared with 2012 it felt behind. With 0.4 points less than the previous year, the increase of non-life insurance premium realized as 2.3%.
The growth of developed countries was very limited due to the stagnation in Europe and deceleration in Asia.
Though the developing countries were not negatively affected by the economic conditions they continued to support growth with 8.3% expansion in 2013.
Though the general profitability is recovering as of 2013, it still has not reached its situation before the crisis. The sector combined ratio has become 100 percent with recovery of one point and the technical profitability has been realized as near-zero by recouping from loss.
The competition in motor (automotive) insurances which comprises a large part of the insurance premiums increased, and the decrease in premiums and unprofitability continued.
These compulsive conditions faced caused companies to focus on net technical profit in the middle of the competition.
Due to that reason, insurance companies tended to expenditure cut, cost reduction and new distribution channel & marketing strategies.
