Despite a challenging backdrop, large commercial (re)insurers realized approximately $200 billion in top-line growth over the last decade. The scale of growth provides optimism for this decade. Some estimates put top-line growth of up to $600 billion by 2030 through new customers (particularly in fast growth markets), a hardening market, well-targeted technology investments, strategic partnerships, and innovative new product offerings focused on intangible assets. Partnerships with local participants, continued rise of GDP and insurance penetration in fast-growth markets will further augment large commercial business growth.
One such example of a leading insurer is Tokyo-based MS&AD Insurance Group holding company. Formed from the merger of Mitsui Sumitomo Insurance, Aioi Insurance and Nissay Dowa General Insurance, MS&AD started with a setback, posting red in 2011 due to the Great East Japan Earthquake and Thailand floods. It devoted the next few years to the concerted pursuit of growth and efficiency, resulting in improved performance with combined ratio for the domestic non-life business of 92% and solvency ratio of 211%, despite incurred losses from US hurricanes in 2017.
Post the reinforcement phase, the group unveiled Vision 2021, a four-year management plan designed to reinforce MS&AD’s position as a world-leading insurance group. The goal is to maintain its top 10 position in the Fortune 500 non-life companies.
In a rapidly changing society with new risks, MS&AD’s overarching strategy is to use its CSV x DX strategy to solve social issues, leading to sustainable growth. Digital transformation (DX) contributes significantly to the goal of solving emerging social issues. To further its narrative of creating shared social and economic value, MS&AD has aligned it with the UN’s Sustainable Development Goals (SDGs). Example being: With self-driving cars just around the corner, MS&AD embarked on initiatives to contribute to making the new mobility society accident-free. This goal overlaps with three SDGs: Good Health and Well-being, Sustainable Cities and Communities, and Partnerships for the Goals.
The three key strategies to turn its Vision 2021 into a reality are: a)to leverage the strengths of the entire group, b)to digitalize aggressively, and c)to reshape the business portfolio. Leveraging the group’s strengths translates into pursuing an even higher level of standardization and sharing between the group’s non-life and life insurance, risk solutions and financial services businesses while strengthening cooperation between group companies in 47 countries worldwide so that best practices percolate fast. The make-up of the group has also been transformed through a spate of international deals. These range from the acquisition of U.K.-based Amlin, No. 2 in the Lloyd’s insurance market in 2016, and First Capital, Singapore’s largest commercial property and casualty insurer, in 2017, to the purchase of a 6.3% stake in Challenger, Australia’s largest provider of individual annuity insurance, also in August 2017.
To stay ahead of the digital curve, MS&AD is actively building alliances with digital innovators around the world. Recently, it implemented AI-based fraud-detection software made by Shift Technology SAS, a French start-up. To gain faster access to the latest developments in digital technology and services worldwide, MS&AD established MS&AD Garage in Silicon Valley in January 2018.
Over the next decade, the largest insurers and reinsurers will further build upon their dominant advantages, which include the industry’s deepest expertise, most capital, broadest global footprints, and best balance sheets. Best in class technology and reskilled workforces and cultures will germinate the change. While in the past, these market leaders positioned on breadth of product offerings, large scale, and capital capacity, the future will see them compete on increased customer centricity, digital dexterity and creating shared social value. To get there, they are becoming more data-driven and reliant on productive partnerships and collaborations. These capabilities will become table stakes in competing with nimbler players who can more effectively compete for new business that previously defaulted to the largest carriers.
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