With all the copy I read through every week as I decide which pieces to publish here at ITL, I'm noticing an odd trend.
For the past couple of years, tons of the articles submitted to me gloried in the insurance industry's "transformation" and "disruption." In recent months, though, lots warn that insurance is at a "crossroads" or an "inflection point" — often dressed up with ominous adjectives so the situation becomes a "major" crossroads or a "crucial" inflection point.
Why the doom and gloom? And is it justified?
The one issue that could potentially merit the inflection point talk for the whole industry is generative AI. In the three years since ChatGPT announced itself to the world, it has already created numerous opportunities for efficiency, and AI agents hold the prospect of far more profound change. If you can get to the point where you say to your AI, "Gather all the information I need for this claim by contacting all the relevant parties," you would, in fact, have a crossroads. Those who figured out how to take advantage of that sort of AI agent would go one way, toward paradise, while everyone else would head in the wrong direction.
But we aren't there yet, and I think it'll take time for us to get there. The Silicon Valley ethos may be to "move fast and break things," but insurance companies don't get to do that. We're not allowed to break things. Too many people get hurt if we do.
The insurance industry faces plenty of other big issues, too: the increased number and intensity of natural disasters, uncertainty and rising prices because of the on-again, off-again Trump tariffs, federal policy that is reducing aid to states following natural disasters and may mean the elimination of the Federal Emergency Management Agency (FEMA), and so on.
But does that mean we're at an inflection point? I don't think so. I think those issues just show that insurance is a complex, dynamic world, of the sort we've been dealing with, mostly effectively, for a long time. The supply chain disruptions because of COVID certainly caused a crisis, for instance, but insurers have already recovered enough that I recently published an article with the title, "Are Auto Insurers Now TOO Profitable?"
Besides, most of the claims of impending crisis I see are about far less comprehensive issues than GenAI. They're about the need to update legacy systems, to clean data, to adopt some more efficient approach to underwriting or handling claims, and so on.
I agree with all the points those thought leaders are making. I also understand the need for innovators to create what is often referred to as "a burning platform." At the Wall Street Journal, I covered IBM in the '80s and '90s, a period during which the very smart executive leaders knew they needed to change to keep up with the increasing pace of innovation in the industry but couldn't quite bring themselves to do anything radical, because IBM had been the most profitable company in the world for so long. Only once the company started taking multibillion-dollar writeoffs and laying off tens of thousands of people — having prided itself on never laying off a single person in its 80-year history — did the company have the burning platform that Lou Gerstner used so effectively to change the culture.
I even accept that some parts of the industry are at inflection points. For instance, I recently published a piece by Stephen Applebaum and Alan Demers, "Embedded Insurance Nears Tipping Point" — because they're right; embedded insurance has been percolating as a possibility for years now and may be about to have its breakout moment, especially in auto insurance. I even published a piece in September with the headline, "Insurance at an Inflection Point." That was before I started seeing the term so often that I became allergic to it, and I wouldn't use it in a headline today, but the article makes a smart point about a potential new business model for insurers.
But we have to maintain our credibility, and we can't be deluding ourselves. We likely aren't doing that if every fifth piece or so that I read claims the industry is at a crossroads/inflection point. (I recently opened a proposed article whose first sentence was, "The insurance industry is at an inflection point," and the next article began, "The insurance industry is at a critical inflection point.")
There is loads of important change happening in the insurance industry, and GenAI will surely get us to an inflection point. But let's not oversell what's happening now.
Not every problem is a make-or-break moment. Not every bit of progress is a game-changer.
Cheers,
Paul
P.S. I seem to need to cleanse my soul every six to 12 months with a piece like this. Here are some of my favorite previous rants, which I think hold up just fine: "Let's Stop With the Gibberish," "May I Rant for a Moment?" and "Two Words We Must Stop Using."
I get riled up just rereading them. Please share with any colleague you think could use a nudge — or maybe a chuckle.