In March 2016, the first Future Trends: A Seismic Shift Underway
report was published, highlighting that a seismic shift in the insurance industry was underway due to the converging “tectonic plates” of people, technology and market boundary changes. The shift was realigning fundamental elements of business that would require major adjustments from insurers for them to survive and thrive.
By the end of 2016, we could make a case that it was a historic year. At no time in the history of insurance can we find one year that includes this many game-changing events and
a rapid pace of continuing advancement. A trend at the forefront of the shift was insurtech. Its emergence represented an industry high point for activity, excitement and concern.
Commonly, major shifts are punctuated with pauses. For example, with the rise of the internet for business use in the 1990s, or the flurry of IT activity leading up to Y2K, monumental changes were followed by periods where insurers could breathe, adjust and move forward. What became apparent in 2016 is that insurtech advancements and the forces of change may not see any significant slowdown. The momentum that has been building is unstoppable. Industry advancements, cultural trends and IT reactions are gaining speed as they gain strength and a framework for stability.
See also: How the Customer Experience Is Shifting
Because insurance industry shifts are in constant flux, decisions based on those shifts must be based on the very latest perceptions. To help, Majesco has issued a Future Trends 2017
report with a fresh set of perspectives and data that will keep insurers abreast of the latest trends. Throughout the report, Majesco also helps insurers consider practical measures for preparation.
The Forces of Change
The Future Trends reports provide context to a shifting industry by placing trends under three umbrella forces/categories: People, Market Boundaries
. Under each category, major developments are discussed and industry impacts are noted. For the 2017 report, Majesco has expanded the subtopics to include:
- Impacts of economic conditions
- Behavioral economics
- Pay-as-you-need insurance enterprises
- Platform solutions
- Competition for Talent
The unstoppable shifts become clearer and more relevant when looked at through the spheres of change.
A changing population, with many members beset by economic challenges, is applying urgent pressure on the insurance industry to develop a new approach to the market; one that demands products and services that are more affordable, tailored to very specific needs, simpler and grounded in trust. These conditions have helped create a “new normal” when it comes to consumers’ and businesses’ risk profiles and expectations. The atmosphere for purchasing decisions is also changing. Insurers need to take a close look at what factors will improve policy uptake in a world dominated by the desire for immediacy.
Customer expectations, experiences, loyalties and relationships are continuing to rapidly change, with long-held business assumptions and models being dismantled and replaced with new models, more appropriately aligned to this shift. The traditional boundaries between industries and companies are also being dismantled by technologies that have created platform-based economic shifts. The result is a porous market, where engagement is everything and the relationships between businesses, customers, channels and partners create their own chemistry. It is exciting! But new strategies are needed for everything from product development to back-end administration.
The rate of emerging technologies will continue, but even more exciting is the rapid adoption and commercialization of these technologies, surpassing many predictions by “the experts,” while catching many traditional executives off guard. Advancing technologies are converging, increasing customer expectations and demands, and access to capital for new technology start-ups is magnifying the extremes – from disruption and destruction to innovation and transformation. Can insurers simply graft these new technologies onto their existing frameworks? It is unlikely. A broader approach is needed. Even insurers focused on replacing their legacy core systems with modern solutions surrounded by digital and data capabilities will need to take a new view and a broader approach to the changes around them to make certain that systems stay aligned with new customer expectations. These expectations highlight a generational gap where traditional insurance business models, processes, channels and products are becoming rapidly irrelevant to a new generation of buyers.
Will established insurers suffer at the hands of tech-savvy, culture-savvy competition? Some may, but only if they allow themselves to. Many will re-invent themselves to become the new leaders of a re-imagined insurance business … that meets the needs and demands of a new generation of buyers. They will forge new roads of adaptation and become adept at shifting balance from the traditional old business to the ever-flexible new business.
See also: How to Cope With Shifting Appetites
Adapting to the Shift
This seismic shift is creating leaps in innovation and disruption, challenging the traditional business assumptions, operations, processes and products of the last 30 to 50 years. The implications for insurers are enormous. To adapt to this shift, the report notes that insurers are charting a path using the following methods:
- Maintain and grow the existing business while transforming and building the new business. The current business is funding the future and needs to be kept running efficiently and effectively as the market shifts.
- Optimize the existing business while building the new business. Optimizing any process will help to maximize the existing business, reduce the cost of doing business and provide a bridge from the past to the future while allowing realignment of resources and investment to the new business.
- Develop a new business model for a new generation of buyers. Create a strategy and plan for a new business model that supports simultaneous leaps forward to create new customer engagement experiences underpinned by innovative products and services that offer growth, competitive differentiation and success in a fast-changing market dynamic.
These three focal points are critical steps in a world of change and disruption. A new generation of insurance buyers with new needs and expectations create both a challenge and an opportunity. There is no clear path or destination. The time for plans, preparation and execution is now — recognizing that the customer is in control. Those who recognize and rapidly respond to this shift will thrive in an increasingly competitive industry to become the new leaders of a re-imagined insurance business that aligns to a rapidly growing millennial, Gen Z and Gen X customer base.
For a deeper dive into current insurance industry shifts, and to envision how your organization can take advantage of unstoppable momentum, be sure to read Majesco’s Future Trends 2017: The Shift Gains Momentum.