The 2020 Global Concerns Survey of insurance leaders by the International Insurance Society contains two major surprises. (I got an early look because ITL collaborated on this latest annual survey.)
The smaller surprise is that COVID-19 ranks only second among the most important issues the executives identified. I had expected that the pandemic would be the top concern, given that 2.4 million people have died worldwide, that economies have been devastated and that insurers face exposure, especially given the recent decision by the U.K. Supreme Court that business-interruption insurance should cover pandemic-related claims.
The bigger surprise is that, while innovation is the top concern, only 35% of respondents said they have an active, comprehensive plan -- meaning that two-thirds do not. A further 12% said their firms are preparing to implement a plan, but that still leaves more than half with little innovation activity.
"I believe the health crisis has actually highlighted the need for innovation." said Josh Landau, president of the IIS. "The pandemic has exposed areas of weakness in how companies connected with clients and staff and managed data."
Maybe I'm taking the lack of innovation planning personally, given how much we stress the need for digital transformation at Insurance Thought Leadership and how many pieces we've published that try to give companies a starting point for innovation efforts.
It's true that not all promises related to innovation have been borne out -- the peer-to-peer model didn't work, on-demand insurance has proved tricky, too many have claimed "transformation," etc. -- but I still see the industry as a good five to seven years into a wave of technology-driven innovation, and I'd think that just about every company would at least have a plan in place.
I suppose the good news is that those of you who have laid the groundwork for substantive innovation have stolen a march on those who have yet to get going. If you've begun reinventing and speeding up your claims processes, are already incorporating lots of unstructured data into your increasingly digital underwriting operations, are experimenting with chatbots, robotic process automation and other tools to take a whack at your operating costs, are exploring how to use technology to reimagine the customer experience from scratch... well, I predict you will be rewarded for your prescience.
In the meantime, we at ITL will redouble our efforts both to sell the industry on the need to emphasize innovation and to help people and companies get started.
P.S. Here is a link to the press release on the study and to a white paper based on it. In addition to ITL, the Pacific Insurance Conference collaborated with IIS on the survey. All three entities are affiliates of The Institutes.
P.P.S. Here are the six articles I'd like to highlight from the past week:
In a business defined by relationships, connecting well on a virtual basis will be more than a change — it will be a requirement.
Insurers can build a sort of digital twin of the customer, then tailor their offerings and improve the customer experience.
COVID-19 has accelerated adoption of e-trading and smashed paradigms. There is an opening for something fundamentally new.
With climate risk on the rise and exposure growing, parametric insurance can plug the gaps left by traditional insurance.
Companies talk about improving customer experience but focus too much on saving money. Customer process automation does both.
In most large firms, risk managers buy cyber insurance--but are rarely expert in network security and may not fully understand the risk profile.