Archimedes, the ancient Greece scholar, is credited with making
the famous exclamation “Eureka!” when he realized he had found
the method of determining the purity of gold. The phrase caught
on, and has been passed down to our culture to be used to express
the excitement of discovery, inspiration, or awareness of something
new that will impact and change the world (or parts of it).
The insurance industry has experienced many eureka moments in 2014, from the accelerating pace of change, disruption,
transformation, and innovation, all with huge significance and
an unexpected intensity. Each of these eureka moments is influencing the vision and strategies for Next-Gen Insurers.
At the beginning of 2014, we predicted a defining year for
the insurance industry. And this has turned out to be a year in
which new and emerging technologies have enabled transformation and innovation, and a year in which the focus on
doing things in new ways will forever change the business of
insurance. What a year it has been. So, what were the eureka
moments of 2014?
A digital revolution is underway. It is massively disruptive,
foundational, and is reshaping all businesses, including insurance. The digital revolution is driven by the ubiquitous connectivity of customers via the Internet and emerging technologies
that are demolishing traditional, historic business assumptions.
Being a digital insurer is so much more than just having a
website or portal for customers and agents, more than using
channels like social media as a point of sale vehicle or advertising arm, and more than having a mobile app to report a claim.
The combination, integration, and intersection of the website, mobile platforms, social media, mobile messaging, location
services, crowdsourcing, business and customer applications,
online video, content management, customer communications,
sales enablement, branding, and marketing work together to
create a seamless, engaging customer experience. And sophisticated data and analytics that know, influence, anticipate, and
involve the customer create a next-gen customer experience.
After all, in today’s world, it really is all about the customer,
their experience, and earning their loyalty. Insurers must embrace to win and be relevant in this new digital world.
A new competitive landscape emerges. A new breed of
competitors is rising out of the companies that grew up digi-
tal—Silicon Valley tech companies like Google, Facebook, eBay,
Apple, and others. These companies are on the forefront of the
digital revolution, redefining everything from business models
to customer engagement, revenue models, partnerships, cus-
tomer empowerment, the use of data and analytics, and more.
In response, centuries-old industries like insurance are
feeling the pressure to reimagine their businesses. The tech
companies have challenged, disrupted, and changed many
industries and businesses, inciting broad moves by others that
have emerged as or transformed quickly into digital businesses,
which are beginning to impact insurance. Consider retail com-
panies like Overstock.com and Walmart selling insurance in the
U.S. or Tesla selling insurance in the UK, or large tech compa-
nies like Google and their new insurance comparison site in the
UK, or IKEA selling insurance in their stores in Sweden.
While these challengers may not compete directly by develop-
ing insurance products and underwriting them, they are compet-
ing in far more insidious and influential ways. They want to capture
the customer relationship, loyalty, and pocketbook. To do this they
are using innovative offerings, engagement, and business models.
The shared economy is shattering economic assumptions.
Based on point-in-time needs, the shared economy empowers
individuals and businesses to access specialized skills, resources,
goods, or services from anyone, anywhere, anytime. It is spawn-
ing new business models that are leveraging the combination
of crowdsourcing, open innovation, and technology. As Susan
Shaheen, of the University of California, Berkley, noted in an
SMA Innovation Ecosystem Webinar, the shared economy is
creating a foundational change from ownership to access. New
business models challenge decades of business assumptions,
models, pricing, and growth that were based on an assumption
of ownership rather than temporary access or subscription.
So, if people choose not to own homes or vehicles, but
rather to seek access only, their need for insurance is altered,
changing the insurance fundamentals from risk models to
pricing, products, and services, and ultimately the customer
relationship. No business can face this magnitude of change
alone, and harnessing the potential of the shared economy and
all its possibilities will mean joining the ranks of those using
crowdsourcing and open innovation.
Traditional companies and their brands cannot afford to be
left out of the shared economy trend. The disintegrating long-held business models and assumptions, along with customer
and revenue growth models, are making it mandatory. In this
new shared economy, insurers must adapt quickly in order to be
relevant—perhaps even to survive.
Emerging technology adoption is exploding. The pace
of introduction, experimentation, and adoption of emerging
The Eureka Moments of 2014
Technology found a way to disrupt, transform, and innovate the world of
insurance technology over the last 12 months.