Time to Reinvent Your Products

Risk managers need solutions but, instead, are offered a patchwork of products. It's time for carriers to break down their product silos.

In my previous article, I stressed that a new commercial insurance model is about breaking down existing operations and rebuilding a collaborative and innovative model. The rebuilt model would improve operational efficiencies, control costs, create innovative products, improve customer engagement experiences and produce sustained profitability. But, if you think operational silos are challenging, I suggest you suit up and put on your protective gear because I’m about to tackle the cold reality of commercial insurance product silos! Should the market simplify risk management solutions? Duh!!! The role of a corporate risk manager is to protect the employees, clients and balance sheet of his or her company. The manager looks to the commercial insurance markets for risk management solutions but, instead, receives product responses that create a patchwork of protection. When the markets can only provide products in lieu of risk management solutions, a variety of customers' risk exposures are left uninsured -- they must now consider self-insuring or creating alternative financing vehicles, including captives. Creating risk management products and simplifying risk management solutions for corporate customers should be the goal of any commercial insurance broker or company. See also: Leveraging AI in Commercial Insurance If companies eliminated product and service silos to create a collaborative risk solutions environment, big data collection and analysis could be implemented across all existing products and customers' uninsured exposures. This collaborative environment would also minimize current big data challenges, including:
  • Unstructured data identification
  • Weak processes to capture and manage data
  • Poor data quality and accuracy
  • Unused data
By eliminating product silos, I’m not suggesting that you eliminate your product experts. On the contrary, each product expert has a vital role to play in challenging and supporting how new and existing products will function. The removal of internal product silos broadens products expertise and knowledge, thus enabling product experts to further comprehend the risks that corporate customers manage every day. You already have the clients – start implementing the tools to create risk management solutions! Currently, commercial insurance brokers and companies are better placed to respond to insurtech competition as, unlike most insurtech startups, they have a large pool of existing customers and the ability to access or create extensive risk management data. When combined with additional imported data such as ISO, ERC and AAIS, an integrated dynamic financial model (IDFM) can be easily created to capture industry, claims, exposure and risk management patterns. Capturing and codifying risk management data is absolutely crucial, as it elevates existing industry claims and exposure models. In addition to creating new risk management products, the IDFM data outcomes can also create a variety of new risk management services, thus creating additional revenues. I’m not a data scientist, but I have always been fascinated with risk identification. Many years ago (more than I care to remember!!!), I created an IDFM model with the crudest of tools. The model outcomes enabled me to create risk management products and services that customers want to buy and eliminated the “one-size-fits-all” product response embedded in the commercial insurance market. Now, by incorporating new technologies such as AI, machine learning, bots and smart sensors to improve risk management analysis, this model becomes even more dynamic! These technological additions to the IDFM model, along with the use of blockchain, enhance the model's ability to:
  • Gather and store even more data elements;
  • Improve decisions based on that data; and
  • Provide relevant answers to improve the company’s abilities to create risk management products.
Additionally, the IDFM model enables the creation of revenue streams such as usage-based and peer-to-peer commercial insurance. These opportunities will be further examined in future articles. All geographic regions are not the same! Expand your mind and create something new! The ability to capture and codify the elements noted in the IDFM model, including the client risk management review, is particularly important for global commercial insurance companies and brokers expanding into Africa, Asia and Latin America. See also: Innovation Challenge for Commercial Lines   Risk managers in these regions continue to express their frustration with market responses as local agents, brokers and insurance companies are not expanding their product portfolios. Global companies are extremely slow in creating products that are specific for the risk management needs of these diverse local markets - instead, companies aggressively sell Europe-centric or North American-centric policies while supporting low margins. These diverse local markets would benefit from improved innovation and increased investment in technology and will be explored further in future articles. And finally …. Commercial insurance brokers and companies must stop viewing insurance through the prism of products and, instead, recognize its true potential as a service. Remember, it is all about the customer! Or, simply put, no customers, no business. Cutting renewal prices and watching margins decline every year is not a sustainable business plan for incumbents or insurtech companies. Instead, the commercial insurance market must break down and rebuild product and operational silos to create a collaborative and innovative model to improve their abilities to package complex risk management products and services. Products and services can be presented in a simpler/intuitive manner, with plain language and processes that clearly manage customer expectations and increase customer satisfaction. Breaking down existing products and operations and rebuilding a collaborative and innovative model will also improve operational efficiency, control costs, increase revenue streams and produce sustained profitability. Let's break down these barriers!

David Cabral

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David Cabral

David V. Cabral is the founder and managing director of Artemis Specialty Ltd., a consulting firm that helps clients develop new products, reduce risk, improve operational efficiencies and increase profits.


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