Airbnb, Jawbone, and Space X. In SMA’s research report, The
Shifting Competitive Landscape: A New Breed of Industry Challengers, we noted that in the changing digital economy a new
breed of potential competitors are coming from technology and
Silicon Valley companies. While they may not compete directly
by offering and underwriting insurance, they are competing in
different ways that redefine customer expectations and capture
customer relationship, loyalty, and pocketbook through innovative offerings, engagement, and business models.
These technology Unicorns and Decacorns are moving at
breathtaking speed and on a high level, with new innovations
and capabilities emerging regularly through their own development, acquisitions, and/or partnerships. More importantly,
their valuations provide ready access to capital, either through
VC firms or through eventual IPOs, enabling rapid growth to
expand market reach, create innovative products and services,
engage customers, and construct business and revenue models.
In this world of rapidly emerging Unicorns and Decacorns
and the growing potential of Black Swans, traditional insurance
business assumptions and models are now or will soon become
seriously challenged. How insurers respond to these changes—
with a fresh set of views that combine both inside-the-industry
and outside-the-industry perspectives—will influence their
future. Here are key considerations insurers must plan for:
K Unicorns and Decacorns are the new Black Swans. A
massive shift in traditional views of business and the world
around us is underway, disrupting long-held business, operational, and economic assumptions. Assess and explore the
impact of these Unicorns and Decacorns to your Next-Gen
Insurer vision by identifying possibilities and outcomes.
K Disruption and change is happening in all industries,
including insurance. Change and disruption are fueled by
technology. The access to capital for building and launching innovative new businesses that leverage technology is
enormous. Scan the horizon of inside and outside industry
influencers and prepare scenarios to respond.
K Innovation and technology are fueling the Unicorns. At
the heart of Unicorns and Decacorns is innovation and
technology. New business models and market leaders are
spawning challenges and opportunities for all companies
… it is just a matter of when. Embrace innovation as a core
mandate and leverage and experiment with emerging technologies to fuel potential and enable market leadership.
K Become a digital insurer. Adapt and transform as a digi-tal-based business underpinned by new customer-driven
and technology-enabled business and operational models.
Reimagine and transform your customer engagement models to meet the raised bar for customer expectations.
K To stay in the game, let alone win, core modern systems
are mandatory. Time is of the essence for moving away
from legacy systems and into modern core systems. Modern
systems are foundational to aggressively embrace and inte-
grate maturing and emerging technologies that will allow
insurers to optimize and innovate. Establish plans for legacy
replacement as a prerequisite to being a Next-Gen Insurer.
K Innovative products and services are essential. With
barriers for new entrants falling and industry lines fading,
new competitors with innovative products and services are
emerging from well capitalized companies and industries.
Invest and commit resources toward creating new products,
services, and partnerships to redefine and reimagine insur-
ance products and services (before the competition does it).
K Running today’s business while creating the future is
vital. The pace of change and adoption of emerging tech-
nologies is rapidly increasing and intensifying the challenge
of the future, while insurers still operate based on models
from past decades or even centuries. Embrace an entrepre-
neurial, fast-moving, start-up type of culture that engages
out-of-the-box thinkers, collaborates with those outside the
organization, and creates a culture of innovation.
K A divide is emerging between market leaders and laggards. Significant shifts in company strategy to respond to
the fast-paced change backed by strategic investments and
project priorities are creating a bifurcation in the industry,
creating a gap that is expected to widen between industry
leaders and laggards. Make a choice. Embrace innovation
and aggressively transform as a Next-Gen Insurer market
leader that is capturing the future and all its opportunities
or maintain the status quo and become a laggard, risking
the future and turning into a casualty in tomorrow’s competitive business landscape.
Major forces are converging, fundamentally changing the
paradigm of insurance. Old myths and legends of Unicorns and
Black Swans have taken on a powerful new identity in today’s
reality. The impact is that insurers will be faced with choices
that are more intense, disruptive, complex, and transformational than ever before. The result will be a new era of emerging
market leaders, whether from within or outside the industry,
that embrace change and disruption. They are capitalizing on
technologies, innovation, and the emergence of Unicorns and
Decacorns to reinvent themselves as Next-Gen Insurers.
Next-Gen Insurers will emerge as the Unicorns and Black
Swans that will disrupt and redefine insurance. Will it be your
company or a new competitor? The industry has an opportunity to rethink, reimagine, and reinvent the business of insurance.
But the time for plans, preparation, and execution is rapidly
fading. So be inspired. Be creative and collaborative. Be bold.
Make the choice to become a Next-Gen Insurer today. Welcome
to the world of Unicorns, Decacorns, and Black Swans. ITA
Contact Denise Garth at dgarth@strategymeetsaction.
com if you’d like to learn how SMA can help you on the
innovation journey and discover new opportunities for the