KEY TAKEAWAY:

--None of the models singly can offer a solution, but, used together, they offer a compelling structure to power the pursuit of business value from data, analytics and artificial intelligence.

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Data, analytics and artificial intelligence (DAAI) agendas are now a part of boardroom discussions at all insurance companies, and what's the next big shiny thing is hotly debated at coffee tables at most insurance companies.

However, determining how much business value comes from DAAI efforts remains difficult. So does deciding who is responsible for ensuring that business value is measurable and sustainable.

We will delve into few value realization models that insurance firms can follow to deal with this conundrum and ensure that data, analytics and AI (DAAI) initiatives remain at the top of business agendas effortlessly.

1. Strategic Alignment Model

Insurance companies using this model have execution of DAAI across the company as an organizational strategy itself. DAAI capabilities are so pervasive that they influence strategic priorities or metrics in the first place.

With this model, questions around the value of DAAI do not have a direct, measurable answer. The strategic agenda alignment model requires a high level of organizational maturity. It is sustainable in the long run.

2. Pain-Point Model

This model uses DAAI to address opportunities and risks that keep the C-suite awake but primarily looks at addressing the pain points. This method follows an iterative process of identifying pain points, collecting data to validate each pain point, establishing DAAI initiatives to address prioritized pain points, implementing solutions and measuring benefits.

This is an effective tactical approach. It also helps build a data-driven culture. Typically, the value creation responsibility is a joint ownership between the respective C-suite executive and DAAl leaders.

3. Customer-at-Center Model

Insurance company operations are inherently complex, with most of the activities geared toward smoothing customer journeys across buy, service, claim and attrition points. Therefore, measuring value created by DAAI initiatives at customer touch points is a reasonable metric, although it does not account for the value created by operational efficiency enhancements.

Assessing, measuring and attributing value created by DAAI in the customer-centric model is a fairly straightforward task and ensures that capital is deployed to enhance the experience of the most important stakeholder of the insurance company, its customers. Value creation in this model is measured at customer touch points so it comes under the remit of teams and tools enabling such journeys.

4. KPI Model

Key performance indicators (KPIs), along with their owners and drivers, are essential for an effective and efficient insurance operation. Any initiative that improves KPIs creates business value, and DAAI initiatives can do so. 

Because organization KPIs and monetary gains are intertwined, however, value may be created but not be adequately showcased.

An organizational KPI model is a logical one to adopt. The individual KPI owners have responsibility for improvement, with a linkage to the DAAI team.

See also: Life Is a Bowl of... Customer Analytics

5. Technology Showcase Model

Adoption and proof-of-value are good surrogates for value creation here. Extrapolation and scenario analysis of future value using present outcomes, albeit limited, also provides good visibility into value.

DAAI teams are responsible for sustainability, measurability and visibility into value.

Conclusion

Ensuring business value from DAAI initiatives does not have a one-size-fits-all solution. There needs to be a single-minded focus on creating measurable and sustainable business value.

None of the models singly can offer a solution, but, used together, they offer a compelling structure to power the pursuit of DAAI business value.

KEY TAKEAWAYS:

--Begin by understanding your data relationship with your partner, then segment your customer base.

--Be sure to set an ambitious enough goal, then test and test -- and never stop.

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While data has long been the lifeblood of the insurance industry, embedded insurance is the latest hot ticket to growth — and for good reason! Executives are practically salivating when considering their share of the $70 billion U.S. embedded insurance opportunity.

Understanding the consumer purchasing the product or service unlocks opportunities for optimization. Consumers should not all be offered the same insurance solutions for all purchases. Such consistent delivery will quickly become white noise for consumers, something to skim past when checking out. The use of data, beyond underwriting, may be the difference that puts distance between winners and losers in the landscape.

Leaders should begin by crafting customer segmentation. The data to fuel this segmentation may include past buying behaviors, which will likely come from a retailer's customer relationship management (CRM) or loyalty program. Loyal buyers may react differently to coverage offers than first-time buyers will.  

See also: 9 Keys for Embedded Insurance

Third-party data can help fill the gaps. It may include standard attributes like age, gender, household income and presence of children. Some providers are even bringing in more advanced data, including a consumer's attitude toward uncertainty, price sensitivity, buying motivations and general interests.

Example: A consumer may be extremely price-sensitive, unwilling to insure any product or event costing less than $1,000. However, when it comes to children’s products, her appetite for uncertainty is reduced and she is more open to a policy on a $300 baby monitor.

Embedded insurance is a partnership

While insurance professionals understand the competitive capabilities of data, embedded insurance by its very nature includes other industries. As insurance products are distributed by non-insurance brands, there are many situations where partners may experience a "data skill imbalance." Said less kindly — the more sophisticated partner may need to drag the other forward if they are going to win as a team. Picture a three-legged race where Usain Bolt picks up his mother to get to the finish line faster. 

As you seek to apply data for marketing and product use cases, a winning partnership will function one of three ways. First, both sides of the partnership may be sophisticated about data. Second, the less sophisticated partner may want to increase their data sophistication. But that takes time and skill, so there is a third option. The less sophisticated partner may be self-aware enough to allow the more sophisticated one to take the lead in strategy and implementation. We are back to Usain Bolt picking up his mother to finish the race ahead of everyone else.

Unfortunately, many partnerships build their strategy based on the lowest common denominator in terms of data sophistication. Data-savvy providers don’t want to push too hard early in a new partnership.

Checking a box? Or competing to win?

Merely checking a box and saying, “Sure, we’re doing embedded insurance,” is going to net exactly the results you would expect.  

Many providers are early enough in their embedded insurance journeys that each incremental dollar is considered a win. With such a low revenue threshold, it’s easy to say “but we’re beating expectations! Don’t fix what isn’t broken.” 

With low revenue expectations for embedded insurance, product leaders can no doubt breathe easier. Unfortunately, low revenue expectations typically also mean the product isn’t provided enough resources or strategically supported internally. Essentially, low expectations hold brands back from greater gains in the future. 

How much embedded insurance revenue should you expect, given your customer base and product suite? By combining multiple datasets,and including a robust view of your typical customer base, you can generate much more accurate revenue forecasts.

While you are operating in a testing phase, or beta period, a pre-optimized solution is fine. The key is knowing when a product needs to graduate to the next level and truly enter the competitive arena.

See also: The Recipe for Embedded Insurance

Ready to win? 

First determine which type of partnership you have. Are you more sophisticated when it comes to applying consumer data, or is it your partner? If neither party is experienced, the first step may be securing a partner that can help bring your organization forward. 

Next, ensure that the data you bring into your analyses and processes is high-quality. The adage hasn’t lost power: It's still garbage in, garbage out. Use your data to establish meaningful goals for embedded insurance. If you take a full view of your product suite and customer base, you may discover that you should dream bigger.

Lastly, start testing and never stop. Consumer behavior is constantly shifting, and the providers that keep up are continually monitoring the performance of all strategies.

The rise of embedded insurance is the perfect example of how the world of commerce is continually changing. To win, providers must maximize all available resources to deliver a winning and simple customer experience.

KEY TAKEAWAY:

--In the wake of a death, beneficiaries have questions that carriers typically do not address, such as: “How do I close my loved one’s accounts?” and, “What am I supposed to write in the obituary?”

--Insurers have begun using an app that streamlines end-of-life bureaucracy and automates estate administration processes. It features to-do lists that suggest action items, such as contacting government agencies and filing claims for IRAs and pension plans. The app addresses self-care, too, with online resources and referrals to local counselors.

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The old saying goes, “When you file a claim, it’s not a good day.”

When you file a life insurance claim following the death of a loved one, it’s a wretched day.

More than 10 million Americans died between 2020 and 2022, according to the Centers for Disease Control and Prevention and the U.S. Census. Assuming each person left behind the average number of three family members, at least 30 million Americans have experienced terrible grief in the past three years.

When carriers can verify the death, beneficiaries receive checks in a reasonable timeframe. In some cases, despite missing paperwork, many insurers issue emergency checks to handle funeral costs and other urgent fees and settle the rest of the policy later.

Even as exceptions are made, the industry is focused on process. Streamlining work methods and catching fraud are important. Becoming more efficient helps management focus on achieving business targets and saves everyone – carriers, clients, beneficiaries – money in the long run.

Process can frustrate policyholders

Yet, as companies experiment with digital engagement, they can inadvertently push their interaction with beneficiaries to the background. Carriers do not intend to upset beneficiaries, but the rigidity of the new processes has frustrated policyholders: Only 30% of Americans have high confidence in life insurance companies, according to a January 2023 LIMRA U.S. consumer sentiment study.

Let’s be honest: Policyholders don’t care about the process. They do care about being heard. And in the wake of a death, they have questions that carriers typically do not address, such as: “How do I close my loved one’s accounts?” and, “What am I supposed to write in the obituary?”

Younger generations might turn to Reddit or Discord for answers, but the information from an online community may not be accurate. Older generations who have gone through this life event before can rely on experience, although there might be new regulations that they are unaware of.

Adding more humanity to insurance

Life insurance is designed to help people in their darkest hour. Now, technology is putting people back into the center of insurance.

For example, FINEOS recently formed a partnership with Empathy, a platform that helps families navigate the emotional and logistical challenges of a loved one’s death. The team at Empathy has found that death in America is an expensive and complicated business for the survivors. Families are faced with an average of $17,000 in costs for funeral expenses and financial and legal matters. On top of that, it takes 13 to 20 months for families to settle their loved one’s affairs.

Most U.S. employees are managing these tasks at work. In its 2023 annual report, Empathy found that 76% of employed respondents said that dealing with loss harmed their performance or work status. Roughly 20% of the workforce at any given company will be grieving a recent loss.

See also: A New Boom for Life Insurance?

Providing practical support

Many of the issues Empathy deals with are beyond the scope of an insurance company’s claims process but critical to support the beneficiary experiencing a life event. So, the Empathy app streamlines end-of-life bureaucracy and automates estate administration processes. It features to-do lists that suggest action items, such as contacting government agencies (Social Security, Veterans Administration, etc.) and filing claims for IRAs and pension plans. The app addresses self-care, too, with online resources and referrals to local counselors.

On an individual level, providing comfort when people are grieving is a kind gesture. From an insurance perspective, it is both humane and makes good business sense. There is a business in ethically helping to build community, especially because traditional support networks are gone. Carriers that demonstrate concern when people are at their lowest point are not just ensuring favorable Yelp reviews. They are reinforcing brand loyalty in those families, quite possibly for generations.

Demonstrating compassion  

The benefits of demonstrating compassion outweigh its costs. Life insurance companies are in business to protect people. By extending themselves beyond putting a timely check in the mail, savvy life insurers are providing practical support to give their policyholders a soft place during an extremely hard time.

KEY TAKEAWAY:

--By embracing these advancements, insurers can enhance their competitiveness, improve operational efficiency and provide superior customer experiences in the ever-changing digital landscape.

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In the ever-evolving landscape of the property and casualty (P&C) insurance industry, technology continues to play a crucial role in shaping its future. With each passing year, new advancements emerge, revolutionizing the way insurance companies operate and serve their customers. Here are the top 10 P&C insurance technology trends that are expected to make a significant impact in the near term, paving the way for a more efficient and customer-centric insurance experience:

1. Artificial Intelligence (AI) and Machine Learning

Advancements in AI and machine learning have revolutionized the insurance industry by automating manual processes, enhancing underwriting accuracy and improving risk assessment. AI will continue to drive innovation in P&C insurance by enabling personalized customer experiences, optimizing claims handling and streamlining fraud detection.

2. Internet of Things (IoT)

The IoT has opened up possibilities in the insurance sector by connecting devices and gathering real-time data. Insurance companies will leverage IoT technology to offer usage-based insurance policies, monitor property conditions and mitigate risks.

3. Telematics and Usage-Based Insurance (UBI)

Telematics, combined with UBI, allows insurance providers to collect data on driving behavior and offer personalized premiums based on actual usage. This trend will gain traction as more insurers adopt telematics devices and develop innovative UBI programs to attract and retain customers.

4. Data Analytics and Predictive Modeling

Data analytics and predictive modeling empower insurers to analyze vast amounts of data and gain valuable insights into customer behavior, claims patterns and risk assessment. By harnessing the power of big data, insurance companies can make data-driven decisions and offer more tailored products and services.

5. Blockchain Technology

Blockchain technology provides a secure and transparent platform for managing insurance transactions, policy verification and claims settlement. Insurers will increasingly adopt blockchain to enhance data integrity, streamline processes and reduce fraud.

6. Digital Claims Processing

Digital claims processing solutions expedite the claims settlement process by automating manual tasks, improving accuracy and enhancing customer experience. Insurers will invest in advanced digital platforms to streamline claims handling, reduce costs and provide faster payouts to policyholders.

See also: 4 Technology Trends for 2022-2023

7. Chatbots and Virtual Assistants

Chatbots and virtual assistants are revolutionizing customer service in the insurance industry. These AI-powered tools offer personalized assistance, answer policy-related queries and guide customers through the claims process. Insurers will integrate chatbot technologies to provide round-the-clock support and improve customer satisfaction.

8. Cybersecurity and Data Protection

With the increasing digitization of insurance processes, cybersecurity and data protection have become paramount. Insurance companies will invest heavily in robust cybersecurity measures to safeguard sensitive customer information, prevent data breaches and ensure regulatory compliance.

9. Robotic Process Automation (RPA)

RPA technology automates repetitive and rule-based tasks, enabling insurers to streamline operations, reduce errors and increase efficiency. RPA adoption will continue to grow as insurance companies leverage this technology to improve claims processing, policy administration and customer service.

10. Mobile Applications and Customer Engagement

Mobile applications have become an essential tool for insurers to engage with their customers. Insurance companies will develop user-friendly mobile apps that enable policyholders to manage their policies, file claims and access support services conveniently.

Conclusion

These technology trends will reshape the way insurance companies operate, interact with customers and mitigate risks. By embracing these advancements, insurers can enhance their competitiveness, improve operational efficiency and provide superior customer experiences in the ever-changing digital landscape.

KEY TAKEAWAYS:

--When it comes to forecasting the liability risk factors of the obesity epidemic, our radars may need to shift away from obesity drivers and toward obesity solutions such as Ozempic and Wegovy.

--It may behoove risk management professionals to think carefully about other emerging risks, as well. For example, numerous products (such as cannabis and, more recently, psilocybin products) are being marketed to help address mental health, sometimes without merit or without clear understanding of what side effects can ensue.

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There are countless factors that go into emerging liability risk assessment. But at a high level, a systemic event typically has followed this track:

1. Company (or Industry) X is alleged to transgress in its operations.
2. Injuries ensue, and a large cohort of individuals coalesce into a class action.
3. The risk “emerges” with a payout of hundreds of millions or sometimes even billions of dollars.

Risk managers and insurance carriers must monitor emerging risks that can pose a threat to the balance sheet of their companies as a result of this type of event. One of these areas of concern has been the obesity epidemic, in part due to a staggering 42% of Americans now being considered obese, a stark increase from 15% in the late 1970s. 

The prerequisites are in place for this to mushroom into a significant liability event, but it hasn’t yet. Causality has been tricky. Is the cause sugar? Saturated fats? Geography? Genetics? There is also a human element: Regardless of actual accountability, it is difficult to vilify the entities whose logos are globally recognized, whose advertisements adorn our televisions and whose products people enjoy.

This isn’t to say the tide won’t eventually turn – it was once thought to be unfathomable that cigarette manufacturers were guilty of anything. But when it comes to forecasting the liability risk factors of the obesity epidemic, our radars may need to shift away from obesity drivers and toward obesity solutions. 

The Obesity Economy Is Rife With Risk

Ever hear of the Emerging Risk Economy? I haven’t either. That’s because it’s not a thing. But should it be?

A massive payout to settle a lawsuit doesn’t necessarily mean a risk is completely emerged. A huge payout could simply be the first chapter of the story. Problems typically lead to solutions -- but they may pose risks, themselves.

The Master Settlement Agreement (MSA) in 1998 led to Big Tobacco companies paying over $200 billion across the country, but there were still millions of people hooked on their products. Fast forward to the advent of the e-cigarette industry, promoted as a less dangerous alternative for addicted users. But some companies ultimately fell into the same perverse incentive structures to lure teenagers to use their products as the original Big Tobacco companies did. As a result, the e-cigarette companies, too, have been sued for hundreds of millions of dollars, an example of "solutions" begetting more risks.

See also: Wellness Vendors Keep Dreaming

While there has been no whiff of an MSA equivalent for any industries that could potentially be contributing to recent obesity trends, the wave of products (Ozempic, Wegovy, Rybelsus and Mounjaro, to name some) that have been developed to assist with weight loss could represent the pathway for the obesity epidemic to “emerge.”

Here are just a few areas of concern that could foster a pathway to litigation down the road:

• Widespread Use – In 2022 alone, 5 million prescriptions were written for the aforementioned weight loss products, up from 230,000 in 2019. This number may be poised to increase, with the successful marketing practices applied by targeted advertisements and social influencers, proliferation of telemedicine efforts by Congress to enable these drugs to be covered by Medicare and a recent recommendation from the American Pediatric Association that physicians should consider prescribing these drugs as part of a set of treatments for kids with obesity.
• Interplay of Competition and Incentives – The companies manufacturing these products represent some of the biggest pharmaceutical companies in the world and are likely keen on getting in on a market Barclays says could reach $200 billion in the next decade. As Charlie Munger once said, we should “never, ever, think about something else when [we] should be thinking about the power of incentives.” And the incentive to tap into this market quickly and beat out the competition for major global players with deep pockets is very strong.
• Serious Health Concerns – Alongside use of some of these products have come reports of renal failure, pancreatitis, intestinal obstruction, lessened bone density, decreased muscle mass, sarcopenia and “Ozempic Face.” The EU recently announced it will be investigating products in this class of drugs amid concern that use may contribute to suicidal thoughts. With use expected to pick up among children, there is scant information available on what long-term impacts can be. 

Keep an Eye on the Emerging Risk Economy

It may behoove risk management professionals to use this lens for other emerging risks, as well. For example, mental health, which has come under the microscope in recent years, has followed a similar arc as obesity. It has been difficult to pinpoint the key drivers to this issue, but numerous products (cannabis and, more recently, psilocybin products are just two examples) are being sold and marketed to help address mental health, sometimes without merit or without clear understanding of what side effects can ensue.

Sports have long captivated the human spirit, bringing people together in moments of exhilaration, triumph and heartbreak. Beyond the actual athletic competition, the world of sports holds valuable lessons for leadership.

By examining the dynamics of teamwork, strategy, perseverance and personal growth inherent in sports, we can unlock powerful metaphors that shed light on practical leadership principles.

Those who know me know I enjoy challenges. The outdoors and sports never fail to exhilarate and provide thrills. Whether it be a pond hockey game, skiing, summer sailing or hiking in the mountains (did I mention the five grizzly bears I ran into last week in the Kananaskis?) with my family and friends. I enjoy team sports and the camaraderie of competing and winning together.

In this article, we will explore leadership lessons from the world of sports, uncovering valuable insights that can be applied within various professional contexts.

Setting Goals and Creating a Vision

Just as sports teams set ambitious goals and work toward a shared vision, influential leaders must clearly articulate what their business is about: what it does, how it serves stakeholders and where it's headed and set challenging yet attainable goals for their teams. 

For instance, when sailing, the captain must know the final destination. Without a final landing spot and critical checkpoints along the way, the crew won't know where the ship is going, and you might get lost at sea.

By instilling a sense of purpose and direction, sports and business leaders can motivate their team members to strive for excellence, work toward a common goal and push beyond their limits.

A McKinsey study finds that 77% of employees who feel aligned with their company’s purpose or vision are engaged in their work, compared with only 20% of employees who are not aligned with the vision.

See also: Moving Forward

Building and Empowering Teams

In sports, successful teams are built on a foundation of trust, collaboration and complementary skills. It's up to leaders and coaches to foster an environment of trust and create opportunities for individuals to grow and contribute with their unique strengths.

Granting autonomy to employees and allowing them to think outside the box while not micromanaging is essential in creating such an environment. This might mean encouraging your soccer team to experiment with new plays or delegating your next marketing campaign to a young, ambitious associate. 

In the workplace, delegating tasks and trusting your team to deliver results are essential for building a dynamic team that can confidently work independently and solve problems without your direct input.

When employees and teammates feel valued and cherished for their skills, perspectives and personalities, they’re more likely to find fulfillment in their work and sport.

Resilience and Perseverance

Sports teach us the importance of resilience and perseverance in the face of adversity. Mark Stone, the captain of the Las Vegas Golden Knights, is a testament to perseverance and resilience. 

Stone underwent two major back surgeries in nine months, which put his participation in the NHL playoffs and even his career in doubt. However, despite playing with unimaginable back pain, Stone returned for the playoffs, and his resilience helped motivate his team to the first Stanley Cup in franchise history.

In business, we will inevitably have ups and downs. As leaders, we need to embrace and weather these setbacks and demonstrate strength in crises.

Most importantly, you must get your team on board by motivating and inspiring team members to bounce back from failures, learn from mistakes and keep pushing forward toward their goals -- no matter how much of an expert you are, nobody can do it alone.

Effective Communication

"You can have the greatest idea in the world, but if you can’t persuade anyone else to follow your vision, your influence, and impact will be greatly diminished." Carmine Gallo, Harvard Business Review. 

Communication is a vital aspect of both sports and leadership. Just as athletes need to communicate on the field to coordinate strategies and make split-second decisions, leaders must master the art of effective communication.

Transparent and open communication channels foster understanding, alignment and the ability to adapt to changing circumstances.

For example, in the sport of polo, each horse has a different personality and unique strengths and weaknesses. In business, no two people are the same and can't be led the same way. Some employees need encouragement and confidence to take risks and chances, while you might need to let others run free or rein them in. 

Paying close attention to your team, taking their concerns seriously and allowing them to voice their thoughts without judgment is critical to understanding who your people are and what motivates them.

This kind of acknowledgment and communication in the workplace can ensure everyone feels valued, understood and aligned.

Strategic Decision-Making

Sports coaches and team captains make strategic decisions that affect the outcome of a game. Whether deciding when to make a pass, take a shot or sub a player in or out, coaches and captains must analyze a situation and make informed decisions in sports as in business.

Inefficient decision-making costs a typical Fortune 500 company 530,000 days of managers’ time each year, equivalent to about $250 million in annual wages.

Influential leaders can overcome emotional impulses and take a step back, assess a situation and decide the course of action. Conversely, leaders who can’t control their emotions often make rash decisions that can lead to catastrophic consequences.

As a sports coach or team captain, this could mean staying level-headed and focused when a call doesn't go your way rather than complaining. The key is to trust yourself, take a step back, focus on how your decision affects your company or team's vision and be ready to adjust if things do not go as planned.

Inspiring and Motivating

Sports fans are drawn to charismatic athletes who inspire and motivate with their exceptional skills and determination. I was inspired by Wayne Gretzky and Michael Jordan's drive and commitment to be the best in the world at their sports.

Effective leaders inspire and motivate their teams by leading by example and creating a sense of enthusiasm and dedication in their work. This might mean getting up early to work on your wrist shot, supporting a teammate or colleague in a difficult time or staying late to help your team close a sale.

In addition, recognizing employees or teammates who lead by example can go a long way in creating a positive and inspiring environment. This can be as easy as saying, "Nice play!" to your teammate or acknowledging employees who deliver on core company values at your next monthly team meeting.

Not only is recognition a simple modality, but its rewards are significant; 40% of Americans would put more energy into their work if they were recognized more often.

See also: The Power of Lifecycle Marketing

Adaptability and Change Management

The most successful sports teams are adaptable and responsive to evolving game situations and opponents' strategies. Similarly, leaders must navigate uncertainties and lead their teams through periods of change. The ability to adapt, embrace innovation and guide teams through transitions is a hallmark of effective leadership.

For example, when sailing, the weather can change instantly. You need to know how to use the sails to compensate, navigate under harsh conditions and capitalize on whatever is thrown at you. It’s not much different when you’re a business leader.

Like the weather, business is constantly moving and changing. Whether you’re steering your ship at sea or driving your business on land, it takes experience and, at times, raw courage to weather the storm.

So, see each storm as a chance to gain experience for the next one and know that sometimes you simply need to batten down the hatches – and wait it out.

Winning on the Field and in Business

To foster an innovative and creative culture, we use and encourage all of these leadership skills as a team at Majesco Global IQX, whether from senior leadership, team leads or junior-level associates, as we help employee benefits insurance companies streamline processes.

Sports provide a rich metaphor for leadership, offering valuable insights into the qualities and behaviors that define exceptional leaders. By embracing the lessons from the world of sports, aspiring leaders can unleash their own inner champions, inspiring and guiding their teams toward success!

KEY TAKEAWAYS:

--More than half of distributors across the P&C industry agree there will be an increase in agent/broker consolidation over the next five years.

--Only about 19% of executives in all P&C lines say insurtech will bring significant change to distribution within five years.

--In times of economic uncertainty, companies often pull back on innovative initiatives instead of investing in strategies with a history of success. Now is a prime opportunity to strengthen and expand existing partnerships while also identifying new partnership opportunities.

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We all know of the traditional carrier/agent relationship—it may, in fact, be the first thing that comes to mind when you think of insurance distribution partnerships. But rapid technological advancements, changing customer expectations and economic headwinds are reshaping how insurance products and services are distributed.

Today, many agency executives are forging new partnerships and expanding existing ones. While some choose to pare back their number of channel partners and focus on their most successful ones, others are selecting to partner with niche carriers that focus on specific industry verticals.

New research reports from ReSource Pro examine retail agencies’ current channel partnerships, their future channel plans and their expectations for changes to insurance distribution in both commercial and personal lines based on a survey of agency executives.

The number one change that more than half of distributors across the P&C industry agree will happen over the next five years is an increase in agent/broker consolidation. This is despite a decline in M&A transactions in 2022 amid widespread economic uncertainty. Although much of this uncertainty remains in 2023, deal volume may rebound this year due to decreased annual inflation rates and less aggressive interest rate increases.

In contrast, fewer executives expect major disruption from insurtech, with only about 19% of executives in all P&C lines saying insurtech will bring significant change to distribution within five years. This does not mean that insurtechs aren’t affecting insurance distribution. While prior concerns about the potential elimination of the agent role have mostly abated, agencies still recognize that insurtechs have an important role in distribution, particularly in the personal and small commercial segments.

When planning their channel expansion strategies for 2023, a small percentage of agencies—8% in personal lines and zero in commercial lines—are pursuing partnerships with insurtechs and digital agencies. This suggests that agencies are still finding their footing with more innovative partnerships and are currently prioritizing the carrier channel by expanding or adding carrier partners.

See also: Biggest Risks to an Economic Recovery

The message here is that agencies are mainly sticking with what they know works. In times of economic uncertainty, companies often pull back on innovative initiatives instead of investing in strategies with a history of success. Now is a prime opportunity for personal and commercial lines insurers to strengthen and expand their existing partnerships while also identifying new partnership opportunities.

For more information on agency channel strategies, see our recent research reports, “Channel Strategies and Plans for P&C Agencies: A View of the Commercial Lines Segment in 2023” and “Channel Strategies and Plans for P&C Agencies: A View of the Personal Lines Segments in 2023.” 

KEY TAKEAWAY:

--The main benefits of building your own software are that it helps with specific demands, can be fully tailored and gives a competitive advantage. The benefits of buying a solution mainly center on cost, ease and quick maintenance and support.

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Entrepreneurs and business owners often identify an area where technology or software could offer customers a better experience or simply provide better efficiency. The next step is to buy commercial "off-the-shelf" software or build a custom solution.

As with most things in life, there are positives and negatives to both depending on your exact needs and budget. However, going down the wrong path might well be a costly business mistake, so it's vital at the early exploration stage to weigh all your options and make an informed decision.

First, you need to know the problem you're trying to solve in detail. What are the unique challenges faced by your company or industry, as well as those common to most businesses? If you operate in a popular line of business, there are likely pre-made software programs available. However, building custom software may be necessary if you work in a specialized or emerging field.

Second, you need to work within your budget. Building in-house software can be very expensive. Consider the initial development costs, as well as annual maintenance and hosting expenses. In contrast, pre-made software solutions typically involve a one-time, annual or monthly fee that covers support, maintenance and hosting, which makes it more affordable but requires continuing investment.

Finally, the timeline and rollout plan is vital to get right. Assess how urgently you require the software. Developing a software program from scratch can take months or even years, depending on its complexity. If time is of the essence, purchasing a pre-made solution that can be up and running within minutes may be the more favorable choice.

Determining the value of building software in-house versus purchasing an external Software-as-a-Service (SaaS) platform can be daunting. While some consultants argue that building your own software is now easier than ever, it is crucial to acknowledge the potential issues that come with creating custom software, such as maintenance and system failure.

Digital transformation decisions often revolve around the trade-off between speed to market and cost savings. This delicate balance can significantly differ across industries. Businesses and brands should consider factors such as control, monetary costs, maintenance, opportunity cost and time to value to help evaluate which option is best for them.

See also: 6 Keys to Successful CRM Implementation

Control

Build:

Building your own software grants complete control over the SaaS platform. However, this also means you're responsible for every detail -- from design choices to technical specifications.

Buy:

Choosing a pre-made SaaS platform requires relinquishing some control but offers convenience and ease. You can use off-the-shelf products as a base but some providers also offer customizations, meaning if you need to solve a specific need the partner will build on top of the core product a new user interface or payment gateway that is required. But purchasing technology or existing products from a SaaS company means you will not have control over the product road map.

Cost

Build:

If you're looking for a fast and budget-friendly solution, building from scratch isn't the way to go. In-house software can rack up hefty expenses such as development costs, continuing maintenance, support, upgrades, hosting fees and system repairs. A whopping one-sixth of IT projects overrun their budgets by 200%. So, if you're set on building your own thing, be aware of the hidden costs you can pick up during the discovery, designing, testing and implementation of your platform.

Buy:

With a pre-made SaaS platform, you pay a subscription fee, which covers the costs of development and maintenance. As SaaS vendors serve a large customer base, they can offer their solutions at a fraction of the cost required to support a custom-built application.

Maintenance and Support

Build:

If you have a substantial budget, you can afford to maintain the software you build internally. However, consider the maintenance costs, such as bug fixes, user profile setup, user training, upgrades and compliance with industry standards. Increased user demand may require additional bandwidth and staff.

Buy:

If the prospect of maintenance seems daunting, purchasing a pre-made SaaS platform is the preferable option. Your subscription fee includes all maintenance services, and you benefit from a dedicated support team.

Opportunity Cost

Build:

Opportunity cost plays a significant role in budgetary considerations. Allocating funds to building a highly specialized app may limit resources available for other business opportunities that may arise.

Buy:

By choosing a SaaS solution, you can allocate more resources and time to other sectors of your business.

See also: The Cost of Still Using Spreadsheets

Time to Value

Build:

Consider your goals and how quickly you must achieve them through new software. Building a software program internally can take over a year. Assess whether you can afford to wait that long.

Buy:

Purchasing a SaaS platform provides immediate access to a complete program, allowing you to connect your goals to actions quickly.

Ultimately, decision-makers need to weigh both options, and the choice will differ across a variety of factors. There is no right or wrong answer.

The main benefits of building your own software are that it helps with specific demands, can be fully tailored and gives a competitive advantage. The benefits of buying a solution mainly center on cost, ease and quick maintenance and support.

KEY TAKEAWAY:

--When a storm approaches, it is important to be aware of how vulnerable you are to its impact. Don't just rely on weather predictions. Familiarize yourself with your area's evacuation orders and routes established by local authorities to ensure a safe and fast evacuation, if necessary.

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With the 2023 Atlantic hurricane season underway and running until November, early indications pointed to a slightly below-average season this year. However, with El Niño conditions present and their effect on storms still unfolding, uncertainties remain, with the potential for an active season.

A single storm, like Hurricane Ian in 2022, can cause catastrophic damage, and the National Hurricane Center in the U.S. advises that preparations should not be based on seasonal forecasts. Developing a well-defined preparedness plan is crucial to mitigate damage from hurricanes and other extreme weather events.

Understanding Storm Risks

Storms come in various forms, such as hurricanes, tornados, cyclones and harsh winter conditions, and the possible damage from intense storms includes flooding, falling trees and damage to rooftops, automobiles and powerlines. It is essential to recognize the specific storm risks in your area and take steps to mitigate them.

Knowing Your Zone

When a storm approaches, it is important to be aware of how vulnerable you are to its impact. In the U.S., the National Hurricane Center advises to "Know Your Zone," which means knowing your evacuation orders based on the potential threat, rather than relying on weather predictions. Familiarize yourself with your area's evacuation orders and routes established by local authorities to ensure a safe and fast evacuation, if necessary.

See also: Weather Science Supercharges Solutions

Creating an Emergency Plan

To minimize loss and ensure your safety, your plan should include actions to take during, before and after the storm. Consider implementing the following when developing your emergency plan:

• Training: Provide comprehensive training for your household or business on storm preparedness. This includes understanding evacuation procedures and protocols given by authorities, emergency communications and first aid instructions. You can also conduct emergency drills to ensure your employees are familiar with the protocols, including where to evacuate.
• Building inspections: Regularly inspect your premises to identify and address any vulnerabilities. Check the structure of the building, secure loose objects and reinforce doors and windows.
• Anchoring equipment: Anchor or relocate vulnerable equipment and other shelf items to safer areas or off-site storage spaces.
• Protecting windows: Install hurricane or storm shutters to act as a barrier against wind from a storm. Window security film can also be applied to the inside of windows to help keep them intact during a storm.
• Flood protection: If your building is in a flood-prone area, install flood barriers, move electrical objects to a higher area and ensure proper drainage systems are installed.
• Salvage and recovery: Develop a plan to salvage and recover vital assets and documents in the aftermath of a storm. This includes having procedures in place for drying equipment and for temporary storage.
• Damage assessment: Establish protocols for conducting thorough damage assessments after a storm. Immediately documenting and reporting any damages to insurance providers will help expedite the claims process.

A single storm can cause catastrophic damage, but by understanding the risks associated with storms, knowing evacuation orders and creating an emergency plan you can mitigate the many negative outcomes that come from severe storms. If you are in the U.S., visit National Hurricane Preparedness for more information about your risk and how to develop an evacuation plan.
 

In today's fast-paced and ever-evolving insurance markets, innovation is essential to reaching new buyers and thriving in the face of increasing competition. Larger carriers may have a resource advantage, but to reach innovation objectives and drive transformative change, partnerships have become the norm for carriers of all sizes. For small or medium-sized carriers, in particular, it can be the best way to enter a new space or gain an edge in an existing one.

Choosing the right partner is therefore crucial, as missteps can be costly to both the bottom line and an insurer’s reputation. To navigate this critical first step, the following 10 considerations for evaluating potential innovation partners provide a useful guide. They can be the key to minimizing risks and maximizing the potential for a successful, game-changing collaboration.

#1 Look for cultural fit.

This requires a strong sense of self-awareness, but every company has its own way of doing things. In your exploratory meetings with the potential partner, do the people you meet with feel like they would be comfortable working with your staff? Do they have the same focus on the customer? Do they treat each other and you with the same level of professionalism? Remember, successful partnerships can last a long time. No matter how brilliant their solution or capabilities, you want to avoid choosing partners your team will feel they have to battle every step of the way.

#2 Screen for strategic alignment.

Maybe even more than cultural fit, you also want someone whose strategic goals align with yours. This isn’t to say they need to have the same goals. For example, a technology company and an insurance carrier will likely have different business goals and express them differently. You need to assess whether both organizations respect each other’s goals, whether the goals are in conflict or synergistic and whether both sets of goals can be achieved through a successful partnership. 

Remember, you are not seeking to create a one-sided partnership. While you’re evaluating a potential business partner, that partner should be evaluating you. If goals are misaligned, it is best to part ways sooner to avoid long-term roadblocks. 

#3 Clarify the problem statement.

A vital first step in innovation is to ensure you are solving for a clear problem based on a validated client need. You must be able to clearly explain it to your executive management so they understand it and buy in to the project. You should expect no less from a potential partner.

If a prospective partner isn’t grasping the problem you’re looking to solve, it could be worth running your problem statement by other industry outsiders who don’t have a vested interest in agreeing with you. This will help you refine your explanation and messaging. If the prospective partner clearly understands the challenge but doesn’t see it the same way, this could be a sign of lack of commitment required for project success.

See also: Is My Organization Actually Innovative?

#4 Listen to how the solution is articulated. 

Sometimes a new technology solution is still in development when you are talking with a startup. The company may also be targeting more than one use case. This might lead to varied terminology being used to describe the innovation, so it becomes critically important that all parties are aligned and can clearly articulate what the solution is, the capabilities it delivers and its key attributes and benefits. Test yourselves by asking: What exactly does the solution do, and can everyone understand and restate that?

If something is not clear, ask questions. Don’t assume you know the answers, especially when it comes to the solution’s availability and capabilities. 

#5 Determine the amount of change required to fit the use case.

Significant change isn’t always a deal breaker but could signal challenges ahead. Few solutions will have everything you need, so in addition to looking at current capabilities, you’ll want to assess if the solution mostly fits your use case or if the potential partner has the ability to tailor the solution to meet your needs. If the solution and its capabilities are not fully shaped, the carrier can be essential to helping refine the solution and bring it to market.

Remember to consider the resources and technical know-how required to make necessary adjustments and the partner’s ability to meet the desired timeline for delivery. Above all, be honest about the capabilities of both the solution and the partner. Don’t force a partnership where one may not be suited.

#6 Gauge willingness to say “yes” to everything.

Closely related to #5: A partner who agrees to every request without considering the long-term implications may not be the best fit. Saying “yes” to every request is a sign that the partner may be unrealistic. Almost certainly, such lack of discipline will stretch limited resources on both sides and put a strain on your project that can lead to missed timelines and half-met critical measures. Look for a partner willing to provide constructive feedback and push back when necessary. Better yet, look for one that can help you identify potential risks and pitfalls ahead.

#7 Evaluate experience with corporate partnerships.

In partnering for innovation, you may run into companies with little experience creating and managing corporate partnerships. If so, you may need to lead the way. Be clear about processes and expectations. Assign dedicated resources to nurture and mentor the relationship.

#8 Assess susceptibility to distractions and industry “noise.”

This is a common problem for startups and established insurance industry players alike. Look for a partner who is also willing to dedicate resources to the project and doesn’t have too many “top priorities.”

In your exploratory discussions, your teams are likely to come up with a plethora of possibilities. While this is an exciting time, it’s important not to set your sights too high too quickly. You and your prospective partner should both be willing to set milestones thoughtfully and park good ideas on a “futures” list. 

#9 Determine appetite for committing to success metrics.

Establishing clear, achievable success metrics to measure performance is vital. A potential partner who is unwilling to commit to these metrics may not be fully invested in the collaboration. If partners have other metrics or set the bar too high, you run the risk they will walk away when the results don't meet their expectations.

This is not to say that a potential partner must always agree on your metrics immediately. The ideal partner is one who will help define success metrics suited to the problem you’re trying to solve and the milestones you both agree to.

See also: Tapping Into Life, Health Innovation

#10 Weigh the opportunity potential.

All parties need to be as realistic as possible when evaluating an opportunity’s potential outcomes and return on investment. Your core team already should have framed out a rough business case as they worked to clarify the problem statement. These estimates often need to be re-evaluated throughout the project’s lifecycle.

While ambition and optimism are essential for any new project, you and your potential partner need to clearly understand the opportunity and the risks involved. You’ll want to agree on what resources will be required to achieve success. If additional resources are required unexpectedly, you should discuss how long it might take to recruit or free up those resources. Finally, you will want to agree on a cadence for project assessment, including the reevaluation of the opportunity, the business case and the thresholds for a go/no-go decision.

Discipline Required

Building a successful business partnership demands discipline and commitment from both parties involved. Your team and your prospective partner's team must be willing to evolve and adapt quickly to unforeseen challenges. This process of evolution, while potentially challenging, can also be an exciting and rewarding experience, as it encourages both sides to learn and grow. 

When working with partners, you can’t always predict how the journey will unfold, but following the right steps will certainly help you enjoy the ride.