Why P&C Must Reinvent Itself Now

While some may consider today's challenges translating to the worst of the times, this is the best of times for innovative-minded P&C companies.


If insurers completely understand the implications of customer trends, competitive pressures and technology leap-frogging, they will be justifiably anxious about their future — unless they prepare.

Drones make an excellent short case for both the threat and the opportunity. If you fly helicopters in Hollywood for filming, or you cover traffic for the evening drive news, or you once flew a fighter in the Air Force, your occupation is in jeopardy due to drone technology. Cinematography isn’t going away. But the method for shooting the video is changing. Drone use for package delivery, powerline examination purposes and even insurance claims research will replace traditional methods with technology-enabled improvements. Those who haven’t adapted will feel threatened. Those who have adapted will feel liberated.

P&C insurers must reinvent themselves. Reinvention begins with an understanding of insurer mindsets. Most insurers still don’t consider themselves to be technology companies. They are risk management companies. But in a hundred different industries, we’re seeing the same shift. Companies that thought they had their niche locked up are finding themselves displaced because of the technology that is linked to their delivery. They need to become tech-flexible, tech-enabled and tech-creative. Technology is still a tool and not the end-game, but it is the thread that makes all insurance scenarios possible and exciting.

Once carriers have awakened to their need for change, most will quickly realize that their efforts are worth it. Every step out of the traditional business model is a step toward organization-enablement and greater profitability. Jump through the hoops, and suddenly the world opens up for rapid innovation and improved competitive positioning. Ask any executive if they would rather have their future dictated to them by technology constraints or if they might prefer instead to write their own success story with creativity as the theme. Innovation will always be “in.”

Recently, Majesco and Capgemini jointly released a thought-leadership paper, Embracing Innovation and Growth Opportunities in P&C Insurance. The paper illustrates the link between industry and market pressure and an insurer’s future ability to fill opportunity gaps. Can insurers capture the right perspective on the forces that are driving them toward change? In this blog, we’ll discuss a few of those pressures in detail, then we’ll touch on strategies that can bridge the distance between knowledge and implementation. 

Pressures, threats and changes — the starting line for insurance innovation and opportunities.

It seems a cliché to say that we are living within a perfect storm of insurance pressure, but the cliché fits. P&C insurance is like a hurricane. The core may look calm, but even it is heading for landfall. The storm is affecting everyone from insurers to reinsurers, brokers and MGAs. Rapidly evolving industry dynamics are offering opportunities for those who can capture the wind. The Majesco/Capgemini report points out five significant areas:

1. Emerging and evolving risk scenarios: Business clients are emerging with new or unknown risks. Existing businesses are moving to digital business models that require updated coverage, such as cyber. Enterprises that use IoT and artificial intelligence need new coverage. Disruptive environmental patterns are intensifying and expanding risks. The pandemic impact on nearly every industry and business is pressuring P&C insurers to rapidly and profitably adapt to new needs, demands and expectations.

2. Increasing competition: Significant growth in managing general agents (MGAs) and program business, and reinsurers that directly bring new products and businesses to market are creating rivalries. Non-traditional players such as automotive, retail and product manufacturers are entering the market. According to the World InsurTech Report 2021 by Capgemini and Efma, more than 50% of customers are willing to purchase coverage from non-traditional players.

3. Expanding customer expectations: Policyholders now seek complete protection, and they conduct independent research to learn what’s available and from which providers. More importantly, they want digital access to their risk products and value-added services on the go and at a faster pace, holistically and conveniently, 24/7. Customers seek peace of mind that their coverage is appropriate, and they are taking preventive measures to protect their assets and avoid claims. Changing customer expectations require P&C insurers to expand and reevaluate old paradigms.

4. New products and business models: Insurtech startups, greenfields launched by existing insurers, reinsurers, MGAs, brokers and other ecosystem players are collaborating and debuting new products and business models that address unmet risk needs, emerging risks such as climate change, new gig and sharing economy risks, new channels with embedded insurance and new product bundles to meet customer needs and expectations.

5. Accelerated technology adoption and landscape showing more opportunities: Explosive growth in new data sources, AI/ML capabilities, cloud platforms with APIs, microservices, ecosystem models and new digital platforms provide unmatched opportunities for insurers to enhance business operations, innovate and redefine their business for the future. While some may consider these challenges translating to the worst of the times, this is the best of times for innovative-minded P&C companies who are ready to embrace opportunities to become the new leaders in the future of insurance. NOW is the time to align business strategy with the new, shifting market needs to execute efficiently.

A strategy to harness the wind

Of course, these pressures are driving everyone. Each organization will make its own decisions on how and when to make the changes that need to be made to stay competitive. Insurers can fight the current, or they can let it push them to recreate themselves. Organizations that wish to lift their sails and let the current and winds carry them on to something new need to understand where this journey is taking them. Even if the organization is planning on using a two-speed approach to their business model, they need to envision how the new model might look. This model will be holistic, encompassing product, services, customer engagement and, of course, processes and technologies that will provide the data and analytics that will assist the insurer and make every moment a learning moment. 

New product strategy

Insurers need to rethink their product strategy and the value proposition by identifying new risk areas and new value-added services and thinking beyond premiums and claims payouts. Insurers should focus on providing comprehensive coverage, coming up with innovative products to cater to new customer segments, exploring new business models such as usage-based insurance and embedded insurance and simplifying their offerings.

For example, Nationwide has launched a comprehensive coverage for customers working from home - providing homeowners or renters insurance, usage-based auto insurance and identification of theft. They saw a need for new insurance package, and they created a hybrid product to fit.

Expanding offerings into value-added services

Insurers must go beyond just the risk product to focus on ensuring a speedier return to normalcy and intervening at the right time for risk prevention and mitigation. Insurers should provide risk advisory and encourage safe behavior, enhancing the customer experience. They can leverage technology to alert customers about loss incidents, thereby preventing losses or reducing their severity. By expanding their role to partner and preventer, insurers can achieve the golden mean between growth, customer-centricity and profitability.

Prevention services are certainly a logical entry point for P&C. International insurance specialist Hiscox partnered with the provider of LeakBot, a smart water leak alarm, to offer policyholders a mobile-app leak detection system. Insurers such as Chubb, Travelers and American Family have partnered with Wildfire Defense Systems for supplemental prevention services for homes and businesses in the case of regional wildfires.

Rethinking customer engagement

An effective customer experience strategy takes an outside-in approach, considering what and how the customer wants to engage – rather than an internal operational view. The customer experience strategy needs data to anticipate possible needs, and insurers must move from transactions to personalized experiences and use a 360° view for the customer whether for buying, servicing, submitting or paying claims and accessing value-added services – making insurance relevant when needed.

New strategies for innovation and new business models to meet the new world of insurance

Next-gen customer experiences that engage and excite customers must take a holistic experience view rather than a transactional view. Significantly changing customer risk management needs and engagement expectations are forcing the insurance industry to move from practices and technologies of the past to new platform-based technologies and business models that will carry them into the future. In our next blog, we’ll discuss that future from the perspective of innovation strategy. What approaches make the most sense in light of financial considerations and traditional businesses that can’t transform overnight?

For a preview of our conversation, be sure to download Embracing Innovation and Growth Opportunities in P&C Insurance and sign up for Majesco’s webinar, An Intelligent Core to Transform Your Business, a conversation focused on property & casualty insurers and their hurdles and needs when looking at new core platforms.

Seth Rachlin, global insurance industry leader at Capgemini, and Denise Garth, chief strategy officer at Majesco, are co-authors of this article.

Denise Garth

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Denise Garth

Denise Garth is senior vice president, strategic marketing, responsible for leading marketing, industry relations and innovation in support of Majesco's client-centric strategy.


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