5 Strategies for P/C Insurers for 2012

The economic uncertainty that plagues buyers of insurance does not bode well for the property/casualty insurance industry, experts are warning.

Ernst & Young, the global tax and business advisory firm, said it expects that low premium growth will persist through 2012, adversely affecting insurer profitability and resulting in the fifth consecutive year of negative performance.

Furthermore, increased regulation will force insurance companies to measure risk in new ways, affecting their capital and risk management strategies, the firm said in its new “Property/Casualty Insurance Industry Outlook” report.

“Insurers that employ flexible strategic responses in terms of capital and resources are best positioned to maximize market conditions,” said David Hollander, the Ernst & Young organization’s Global Insurance Advisory leader.

Hollander said that despite the current climate, there are steps insurers can take to “better understand changing insurance buying behavior” and use business analytics to achieve a competitive advantage.

In particular, Ernst & Young has identified five strategies that it recommends U.S. property/casualty insurance companies explore in 2012 to improve their chances for success:

“As the U.S. property/casualty industry continues to confront a difficult climate, it is also challenged by regulation and an uncertain governance and compliance agenda,” said Shaun Crawford, Ernst & Young’s Global Insurance Sector leader. “In this environment, insurers should consider strategic approaches that are flexible – capable of responding to economic pressures as they emerge, intensify or weaken. In 2012, companies that invest in core systems, information resources and employ skillful management processes, stand the best chance of succeeding in these challenging times.”

The complete “Property/Casualty Insurance Industry 2012 Outlook” report can be found at www.ey.com/insurance.