Creating a Competitive Advantage

Creating a Competitive Advantage

          
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Creating a Competitive Advantage

The European Insurance Landscape
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  • Creating Competitive Advantage: The European Insurance Landscape is the second comprehensive report on European insurance published by The Boston Consulting Group and based on the research of the firm’s European insurance-landscape team. It draws on a systematic analysis of the major insurance groups and markets in Europe, as well as on our experience in advising many of the industry’s leaders.

    The report covers 100 leading European insurance groups that generate a worldwide premium volume of more than €1 trillion. Geographically, it covers the nine major Western European insurance markets, which, ranked by premium volume, consist of the United Kingdom, France, Germany, Italy, the Netherlands, Spain, Belgium, Switzerland, and Austria. Together, these markets represent annual premiums of €875 billion and account for 84 percent of the total European insurance-premium volume. Finally, it also analyzes more than 300 of the largest local insurers, 164 of which are either one of the 100 leading European insurance groups or one of their local country subsidiaries. These local insurers generate more than 80 percent of the local life and nonlife premium volume in the nine markets.

    Since the financial crisis of 2001 and 2002, the European insurance industry has recovered significantly. While the recovery was supported by favorable stock markets, it was also strongly driven by improved technical results. Looking ahead, increased competition will force insurance executives to break the traditional compromise between profitability and growth and create sustainable performance on both dimensions.

    Competitive strategic positioning in home markets and across foreign countries and businesses is the foundation of value creation in the industry. Insurance groups that focus on attractive markets, build local leadership positions, define their international business model, and shape their geographic footprint will create advantages that can be translated into superior performance. Insurers with disadvantaged positions, by contrast, will have to go the extra mile to achieve similar results. Consolidation will further shape the insurance landscape, as most local insurers are subscale in size, and most of the foreign portfolios of international groups are still highly fragmented.

    Profitability and growth vary significantly, even among insurance groups with similar strategic positions. Driving the differences is the extent to which senior management is able to execute on the basis of a set of distinct capabilities to exploit sustainable advantages. Defining critical capabilities, setting targets, and enabling the organization to meet those targets have become the most important management challenges in the consolidating industry. Companies that wait too long before they act will lose out, or worse, disappear.

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