Too many insurers are overly reliant on old ways of doing things – culturally, organisationally and technologically, to survive the next decade. For sure, insurers have survived many momentous changes in the past whilst only incrementally nudging their underlying processes and business model. The problem for insurers lies in the confluence of several emerging and maturing trends across the spectrum of their business; any one of these could be sufficient to impact business but as a whole, change is unavoidable and for those who fail to act, this will not be a positive experience.
The barriers to entry the market are gradually eroding; indeed it is somewhat ironic that regulation – long held as a chief challenge for the industry – is perhaps the strongest remaining barrier in many markets to a flood of new competition.
The list of challenges confronting the industry is diverse and unsettling. An aging workforce, a reliance on legacy technology, several potential data driven competitors from adjoining sectors, a lack of public trust in many markets, the decline of certain lines (such as auto) thanks to automation, ill prepared systems for capturing and analysing data predictively, and an incomplete journey towards customer-centricity are just some of the issues confronting insurance companies. These issues also represent a chance, for those with the foresight and execution, to develop new value propositions and capture more of the market.
This will start with staff; having a data literate workforce operating in data informed processes and an agile, more flexible culture will become an increasingly key success factor. The architecture staff operate in must also be renewed since big data analytics represents a structural transformation in how enterprises are managed from top to bottom. The level of data integration and analytics will require many new skills and cross-functional buy-in in order to break down the many data and organisational silos that still exist within businesses. However, expanded data capabilities will enable insurers to design and promote more flexible products that allow consumers and adjust their coverage as circumstances change. New niches will open; for example there is a possibility for insurers to become trusted lifestyle consultants with data driven insights (from IoT for example) given back to customers in a multitude of value adding ways.
In addition, platforms for interconnection between all stakeholders should be investigated as part of the need to provide greater consumer centricity and forge new ecosystem partnerships. The need to cooperate with emerging InsTech and tech companies will be pressing in the quest for innovation; big bang change could easily overwhelm systems and people, hence the need for targeted pilot-runs of technology, and closer third party collaboration. Cultures supportive of failure (as a key part of innovation) and collaboration with potential rivals will need to be nurtured if this is to succeed.
Virtually every part of the business will require rethinking and reimagining, leading many insurers to ask themselves what business they are in. Regardless, all insurers are now tech companies, or at least need to be. They need to start acting like one if they are to survive.