The insurance industry is highly competitive as individual agents and companies compete with one another for a larger portion of the market share. The Bureau of Labor Statistics expects average growth in the insurance industry in terms of the number of new jobs that will be created between 2008 and 2018. With minimal growth to look forward to, insurance agents and companies will have to differentiate themselves in the marketplace by meeting a number of critical success factors.
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Using the Internet
One critical success factor for the insurance industry as a whole and particularly for individual insurance companies, is the need to update the way that business is conducted. The Bureau of Labor Statistics (BLS) notes that growing use of the Internet will eliminate some jobs within the industry and increase employment in others. While it may adversely affect the employment of sales agents, for example, by allowing people to obtain instant quotes online, its power as a marketing tool will provide the industry with an undeniable ability to continue to grow and increase revenue by reaching people quickly.
Sound Business Strategy
The Industrial Alliance Insurance and Financial Services Inc. notes that size of an insurance company is incidental to its success if it has a sound business strategy in place. A sound business strategy can provide an insurance agency or company with the stability it needs to withstand the ebb and tide of the market and its fluctuations. According to the alliance, a sound business strategy consists of focusing on excelling in one functional skill like selling. Secondly, it involves focusing on one specific market within the industry such as life insurance. That market should be one where the company can establish its niche. In other words, it is necessary to focus on one sub-market within the larger market. It also means planning for changes in the industry and learning to exploit them to your advantage.
In the aftermath of the recession that started in 2007, it is critical for insurance companies to exhibit financial strength in an increasingly tough economic climate. Financial strength assures consumers that they are making financially responsible investment decisions. Financial strength entails having strong quality assets, the ability to raise long-term capital, adequate money reserves, a proven risk-management strategy and high ratings given by companies or organisations that assess financial strength.
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