ogies and changing our world—and look to disrupt the business
of insurance. How insurers face these challenges and bridge
their current world to the future is the critical key to success.
When you look from the outside in, it feels like the pace of
change is accelerating beyond comprehension, and keeping
pace may feel like an insurmountable challenge.
The facts on the digital connected world transformation are
astounding. The trends clearly show a shift away from insurers’
traditional behavior: They are slowly embracing the “outside”
Three trends are especially intriguing:
K VC: Nearly all of the large national and global insurers are
actively establishing venture capital arms. They, along with
many of the traditional technology investment VC firms, are
investing in startups focused on new technology solutions specific to insurance—new agent/broker firms and even insurance
company startups. This trend is causing the movement of huge
amounts of capital, the advancement to the forefront with these
new technologies, and the maximizing of investment gains.
And the outcomes are disrupting traditionalists.
K Insurtech: In January 2016, SMA tracked 250 tech startups
with insurance focus. Today, just eight months later, SMA is
tracking over 350. There has been an explosion of investment
and innovation. Many of the startups will fail, but there will
be a handful that will reshape the business of insurance.
K Partnerships: Insurers are creating new partnerships with
global networking companies like Facebook and LinkedIn.
Other global technology companies like Google, Micro-soft, and even IBM are partnering with national and global
insurers. These partnerships are also expanding into auto
and other industries as the digital connected world matures.
There is one thing for sure, they are all creating and innovating to produce next-gen solutions, platforms, and offerings,
not only for insurers but for customers and policyholders too.
Bridging the Two Together
We at SMA know that just below the surface, insurers are working hard to respond to external changes in a variety of ways and
to transform their businesses in response to these external stimuli. We have observed patterns of change adoption in insurance,
which at times may have seemed scattered, unstructured, and,
depending on the size of the insurer, erratic. Innovation is being
embraced in insurance—it really is happening—but it is still
difficult to apply absolutes or assign consistent patterns.
Bridging the traditions of insurance with the new emerging ecosystem of technological innovations and partnerships
is essential for future success. SMA recommends that insurers
proactively plan to bridge to the future, building in capabilities
that will achieve near-term goals for improvement, while moving toward a Next-Gen Insurer model.
The following suggestions should be part of your bridging
K Operationalize customer-centric strategies: Improving the
customer experience has been the top strategic initiative for
insurers in 2015 and 2016 and is sure to remain critical in
the years to come. Emerging technologies and the increasingly connected world have a large impact on customer
needs, behavior, and expectations.
K Modernize core platforms: Technology systems for rating,
policy administration, billing, and claims are the hub of every
insurance company. Many a company has discovered that legacy systems in these areas stand in the way of implementing
new business strategies and seizing market opportunities.
K Build a flexible organization and workforce: Technology
and process don’t improve by themselves. New business
models, new ideas, and ways to capitalize on emerging trends
and technologies come from an organization and the people
that are able to change. Culture, organizational structure, new
roles, and agile technology infrastructures are required.
K Major in data and analytics: Every insurer needs to create
an enterprise strategy to leverage their internal data assets
and capitalize on more external data in the marketplace. At
a minimum, the strategy should start with master data management and include a strong business intelligence foundation. Building skills and capabilities are critical as well.
K Institutionalize innovation: Innovation is not a passing fad.
The creative rethinking of the business is a requirement for
success in a world that is transforming. But institutionalizing
innovation means going beyond imagining new ways to do
business and extends into operationalizing those ideas.
K Go digital: Now is the time to create a more comprehensive
strategy to improve digital operations across all aspects of
the business. There may still be a long way to go on this
journey, but it is important to have an overarching strategy.
K Keep your finger on the pulse of the emerging trends and
technologies: Not all emerging technologies will require the
attention of every insurer. But each insurer should identify
those with the most potential impact for their own company,
develop a plan to monitor them, and invest and experiment.
Just as Schlesinger explained in the opening quote, technology will change the world, but acceptance of change will be
shaped by pre-existing ideals and norms. That’s why it is important for insurers to build a bridge between the two worlds.
This bridge building is the major theme of the 2016 SMA
Summit: Next-Gen Insurer on Sept. 19 in Boston, and open to
all insurers. Insurers will be able to seek insights, examples, and
guidance for finding ways to successfully build these bridges—
between today’s traditional inside out ecosystem and the future
outside in ecosystem. For more information about the Summit,
visit www.strategymeetsaction.com/Summit. ITA
Deb Smallwood is the founder of Strategy Meets Action.
She can be reached via mobile at 603-770-9090, or at