While some see scenario planning as academic, it typically yields surprising insights that inform short-term and mid-term strategies.
The disruption of the P&C insurance industry, touted by insurtechs and others, may not have hit full force, but outside forces will drive a tsunami of change. Technologies such as AI/machine learning and the Internet of Things are already prominent in insurer strategies and projects. The demographics of the insurance workforce are shifting and will drive many changes over the next decade. New technologies in the digital, connected world promise to change the risk landscape – in some cases dramatically reducing risk and in others introducing new ones. There is much experimentation with products today, addressing the sharing economy and on-demand, episodic and parametric types of coverages.
The changes raise questions in many senior executives’ minds about the nature of the insurance business in the future. Will change really be dramatic, or is it overly hyped? How will it affect the lines and segments of an individual company?
Lacking a crystal ball, it is very useful to employ a scenario planning approach, developing and evaluating several possible futures in the context of a specific insurer’s business. While some may view this as an academic, blue-sky exercise, it typically yields surprising insights that serve to inform short-term and mid-term strategies.
See also: Insurance 2030: Utopia or Dystopia?
Naturally, initiatives should not occur in a vacuum. A realistic assessment of the current state of the company is a good starting point: the products, people, processes, technology and other dimensions of the existing model. The intent is not to scrap existing strategies and plans but to layer in new strategies over time that position for the future. Ultimately, every insurer needs to build and execute along its transformation journey or fine-tune and enhance journey plans based on new insights.
What will insurance look like in 2030? We humans have proven to be bad at prediction. So, in an era of rapid change, successful companies will be those that create a culture and an infrastructure that is adaptable, enabling them to seize new opportunities as the world changes.
See also: An AI Road Map to the Future of Insurance
For more information on scenario planning and the development of digital transformation plans for insurance, read the recent SMA research report, Insurance 2030: How Technology is Transforming the P&C Landscape.