Accenture: Perfect storm threatens to sink insurers’ earnings by nearly 40%

Perfect storm threatens to sink insurers’ earnings by nearly 40%

Recap: Stagnant sales, low interest rates, rising competition, increasing customer expectations, growing regulatory requirements and widespread, technology-driven disruption of key markets, are threatening to significantly erode insurers’ revenues. We estimate that this “perfect storm” of adverse forces could jeopardize 30 to 40 percent of the headline earnings of some traditional insurers by 2020.

The Thesis: These costs could, when combined, reduce an insurer’s EBITDA by 2020 by a staggering 54 percent:

  1. Loss of market share to new entrants
  2. Loss of market share to progressive competitors
  3. Premium reduction
  4. Deteriorating efficiency
  5. Regulatory requirements

Internal Obstacles:

  1. Cumbersome organizations
  2. Lackluster technology
  3. Insufficient customer focus

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