Expansion into emerging markets is considered by analysts as important or critical to earn superior ratings:

• All p&c insurance analysts said merger and acquisition (m&a) initiatives by North American, European, and Japanese insurers into Brazil, Russia, India, China, Mexico or South Korea are an important or critical driver of superior ratings over the next three years.
• A majority (88 percent) of life insurance analysts said organic growth in these emerging markets is important or critical to earn superior ratings in the next three years.

"While emerging markets may be crucial to the future performance of global groups, they are no panacea," says Thomas Meyer, managing director of Accenture's Insurance practice for Europe, Africa and Latin America. "Many countries are resisting the efforts of global carriers to enter their markets and compete against local firms. Also, the lack of homogeneity of emerging markets, where the cultural differences are more significant than in Europe, makes it difficult for insurers to achieve economies of scale across borders. Thus, a global operating model which allows the insurer to capitalize on its proven assets, processes and capabilities, while adapting to local needs, is essential to expanding into such markets profitably."

Analysts rank "pricing strategy" and "quality of service" as the industry's top value drivers over the next three years, named by 95 percent and 94 percent of the respondents, respectively, ahead of  "data analysis capabilities" (86 percent).

The survey also reveals that underwriting risk management is perceived as the most critical technology investment to improve business performance, mentioned by two-thirds (67 percent) of the analysts surveyed.

"To act decisively in a transforming marketplace and achieve organic growth, rich data, advanced analytics, and predictive modeling are invaluable," says Meyer. "These capabilities help insurers understand and segment their markets, and also continually refine their business and operating models to ensure these are ideally suited to provide each market segment with the right products, at the right price and through the right distribution channels."

In addition, given that the essence of the insurance business is to deal with risks—risks against which they cover their policyholders or risks they are taking by making financial investments—profitable growth can't be achieved without highly efficient risk management capabilities, according to Meyer.

"By aligning risk management with their overall business strategy, and integrating it with their key business processes, insurers can enhance operational performance, reduce costs and deliver distinctively superior customer service by ensuring fair treatment of policyholders," he says

Environmental issues, such as the increasing volatility of natural catastrophes, are the most widely cited industry challenge for P&C insurers (58 percent), while new regulations and reforms, such as the Solvency II directive and the Dodd–Frank reform, were perceived as the number-one threat for life insurers (83 percent). The uncertainty of financial investment returns was the number-two challenge for the overall industry, cited by more than half (55 percent) of p&c analysts and almost two-thirds (65 percent) of life insurance analysts.

Among the survey's other findings:

• Analysts in Asia Pacific are the most bullish regarding growth: they expect the insurers they recommend with "Buy" ratings to show an average growth rate of 11 percent this year, while their colleagues in Europe and North America expect 6.7 percent and 6.1 percent respectively.
• European analysts are the most demanding in terms of profitability: they expect the insurers they recommend with "Buy" ratings to show an average pre-tax RoE of 16.4 percent this year, while their counterparts in North America and Asia Pacific expect 12.1 percent and 13.8 percent respectively.
• North American analysts favor organic growth in mature markets (mentioned by 92 percent of North American analysts), ahead of m&a in emerging markets (78 percent), while European analysts favor organic growth in both emerging markets (81 percent of European analysts) and mature markets (59 percent).
• Analysts believe investment volatility (71 percent) and new regulations and reform (52 percent) are the biggest threats to North American carriers. For European companies, regulations come first (61 percent) and investment volatility second (57 percent). In Asia Pacific, regulations are by far analysts' greatest concern: they score 92 percent, compared to 67 percent for slow growth in core markets and 50 percent for investment volatility.