Tactical measures for tactical situations

See previous blog: Dramas and crises

Well, it has been a roller coaster few weeks we have all just experienced; debate goes on about the fate of RBSI and AIG, two major pillars of our industry, but I hazard to suggest that they will not be the only businesses to suffer at the hands of this global economic situation. Strategic business decisions will surely get put on shelves whilst tactical measures are drawn up to be able to trade through these difficult times.

What seems likely is that we will all have to batten down the hatches, tighten the girths and trip out whatever other analogies we can think of for coping with hard times. Of course what everyone wants to know is how bad it will be?

“What seems likely is that we will all have to batten down the hatches, tighten the girths and trip out whatever other analogies we can think of for coping with hard times.

Jim Woods

Not the same causes but similar doom and gloom prevailed back in early 1974, when I was working in the city just by Bank Station, and we all experienced what became known as the three day week. On the days we were allowed to come in I happily worked away calculating my surrender and policy conversion values by the light of a tilley lamp on the desk.

We still had mechanical calculators in those days, fortunately so, because any electronic calculators were mains powered so were strictly off limits. The real fun used to start at London Bridge station in the evenings when you tried to get your train home. I was commuting up from Pulborough, West Sussex but it frequently transpired that train services would stop around Gatwick or Horsham and then you were on your own, as they say. I even remember preselecting the Post Office on King William Street where I knew I would have to go to get my petrol rations. Fortunately it never came to that.

For our current personal lines industry, the likely effect of reduced investment performance, reduced discretionary income and a fairly stagnant housing and car market, will be increased competition for insurers. Hey, so nothing ever changes in our world. So, what should insurers do about it? Get themselves present on even more aggregator sites? Well, frankly, when margins are squeezed, does it really make any sense to try and gain more market share by jostling with an already noisy crowd trying to make yourself heard that you are ever so slightly cheaper than the next man?

“For our current personal lines industry, the likely effect of reduced investment performance, reduced discretionary income and a fairly stagnant housing and car market, will be increased competition for insurers.

Jim Woods

I believe there is a more intelligent reaction, based upon differentiation; insurers can offer truly lower premiums if they can encourage their policyholders to self administer. There is a growing community of web savvy individuals (who, incidentally, are both networked socially and through business connections– think cross sell/up sell.....) who would be delighted to exchange some of their own effort in managing their policy administration online for truly lower premiums. Technology is now available for insurers to be able to introduce such online propositions in a few months rather than the years it has traditionally taken to launch new offerings. The beauty now is that this is possible without really having to touch legacy environments which is always the reason companies use to justify not doing anything.

I don’t relish the hard times we have ahead; I would rather not have to contemplate petrol rationing again, or whatever other hardship this particular round throws up, but what I do know is that the climate will present some exciting challenges for our industry.

It will be fascinating to see which businesses grasp the opportunities presented.

Jim Woods is business development manager at Duck Creek.