Insurance is transforming at light speed into a digital and data-driven business. Consumer expectations, which – contrary to what some would have you believe - have essentially not changed for some years now, are finally being met by the industry through a mass-awakening and rapid wave of disruptions. Not all of these disruption have the potential to prevail, and even fewer have the ability to rapidly evolve that will be required to remain relevant in the coming years. What is likely, however, is that insurers who do not move to adapt and succeed through rapid innovation are destined to be left behind, perhaps permanently.
These are dire predictions – but, what is the real prospect for ‘traditional’ or ‘legacy’ businesses to succeed in this environment. It is somewhat daunting, as the forces at work are not within the control of the players. Expectations and needs are shaped, not by the insurance industry, but by the likes of Amazon, Netflix, and Google. New technologies, like Artificial Intelligence, are leaping out of the laboratory and delivering on a promise to eliminate the constraint of the traditional value chain. These are no longer ‘nice to have’ capabilities. These have become, almost overnight, must have – table stakes.
Some players look to the InsurTech revolution as a way of reinventing and leaping forward. This does have some merit, but more likely is that the most successful insurers will be those that figure out how to reinvent themselves in the age of Digital and Data, irrespective of their participation in InsurTech opportunities. Many of the ideas introduced through InsurTechs are valuable disruptions to the industry and sources of inspiration; but more important is a holistic strategy that includes :
- Modernising current offerings : using the smart user experience powered by Digital and Data capabilities. Offering personalised, self-service options for the current customer base, and providing collaboration tools for the distribution channel;
- New Propositions through Digital : expanding from risk transfer products to provide prevention and protection services that are powered by smart devices and AI. Leveraging new channels and propositions, and make these available to new customer segments.
Before any of this can actually happen, the business must understand the competitive landscape, the implications of adopting the new technologies available to it, and get alignment on the performance targets that are necessary to success against the leading and new players in the market. One way to do this is through a Digital Attacker model – delivering high-quality, low cost insurance products, with unique and compelling user experiences, partnered with a technology platform vendor and the requisite marketing/distribution channel partners.
It is critical to gain and execute on early momentum, and deliver quick wins with tangible business value. Fast is now, not next year. Reinventing the core platforms to make all this work is a recipe for disaster. An industry standard, robust and scalable platform is the building block for a successful path to innovation. Adopt best in class, standard processes, for the core – harness the Digital and Data platforms to drive the differentiation, and deliver the business model that customers require.
The industry is awake – to stay awake requires agility and flexibility at a level which we have not previously seen among insurers, simply as the environment did not drive the need. Overnight this has changed. Insurers are forced into motion, and once this has happened there is no stopping it.