Tag Archives: next-gen insurers

Venture Capital and Tech Start-ups

Unicorns – to some they are just mythical creatures of lore. To today’s tech world, a unicorn is a pre-IPO tech start-up with a billion-dollar market value. These are the companies driving innovation, technology and disruption in every corner of every business, and their impact is truly being felt across the insurance industry.

The number of unicorns is as elusive as the creatures themselves, as the herd is growing rapidly.

“Fortune counts more than 80 unicorns today, but more appear with each passing week. Some even received their horns, so to speak, as the magazine went to press. And they’re getting bigger — there are now at least eight ‘decacorns,’ unicorns valued at $10 billion or more. So much for being mythical.” — Fortune

Recognizing the powerful sway that unicorns have over new technologies, business models and more, insurers are now getting into the unicorn game themselves. They are identifying technology start-ups that can transform insurance and are becoming venture capitalists to tap into this great potential for creating the next generation of insurance.

Different models and approaches are being used to identify, assess and influence these companies’ offerings. By understanding the benefits of outside-in thinking, insurers are finding ways to leverage these innovations. Some insurers are partnering with leading technology firms. Some of the large insurers are setting up their own venture capital firms. Still others are creating consortia to fund new start-ups to help accelerate innovation.

Insurers and Unicorns

The following are a few examples of new partnerships in 2015; the trend is continuing;

AXA– In February 2015, AXA announced the launch of AXA Strategic Ventures, a €200M fund to boost technology start-ups focused on customer acquisition, climate change, travel insurance and more. The goal is to advance AXA’s digital and customer strategy by connecting with new technologies, new solutions,and new ways of thinking. The company anticipates the fund will complement AXA’s major operating investments, across all entities, into research and digital developments that will help transform how customers experience AXA.

XL Insurance – On April 1, 2015, XL Insurance announced the formation of a venture capital fund, XL Innovate, to support insurance technology start-ups, with a focus on developing new capabilities in the insurance sector. XL indicated that this effort would extend its capabilities in existing markets and give it new opportunities to address some of the most pressing and complex risk problems in the global economy. In addition, XL sees it as a critical element to driving focus on innovation forward while securing relevance in the future.

Global Insurance Accelerator – In February 2015, a group of seven Iowa-based insurers announced the formation and launch of the Global Insurance Accelerator (GIA), an insurance accelerator for start-ups. The start-ups receive $40,000 in seed money from the pool to create a minimum viable product to present to the Global Insurance Symposium. The insurers involved believe that the accelerator program will bring potential innovation and technology insights to the insurance industry.

The Future

Innovation, technology and the need to be future-ready are fueling today’s unicorns and their capital supporters rapidly expanding the herd. In turn, these new business models and market leaders are spawning challenges and opportunities for all companies.

Today’s forward-thinking insurance companies are running their businesses while simultaneously creating their futures as Next-Gen insurers. It’s critical to recognize the power and benefits of innovation and the role that unicorns play in planning for tomorrow.

This is a decisive time as Next-Gen insurers emerge along with their unicorns to disrupt and redefine insurance and competitive advantage. What is your company’s approach to leverage and experiment with emerging technologies, start-ups and unicorns to fuel the potential and enable future market leadership?

Succeeding in the Digital Revolution

History has seen different technology revolutions: the industrial revolution in the late 1700s, the information and telecommunications revolution in the mid 1900s and the digital revolution of the present. Each revolution has taken advantage of the new technologies of its day, creating disruption, innovation and business transformation. Businesses have either grown or died based on how they adapted to and innovated with the new technology and responded to customers’ reactions and expectations.

Today is no different. But it is much more intense. The digital revolution is being powered by today’s hyper-connected world and the convergence of multiple influencers — maturing technologies, emerging technologies, the shared economy and demographic trends, to name just a few. And the revolution is creating experiences, products and services, new outcomes and new business and revenue models. It is generating an explosion of data from new and emerging technologies such as mobile, social media and the Internet of Things.

The combination of these factors is transforming existing businesses and creating new ones within insurance. From managing value chains to managing ecosystems, the business transformation is powered by the fusion of technology and data. At the same time, these factors and the pervasive use of technology are lowering the entry barriers for disruptors and competitors from other industries, changing the competitive landscape for insurance in profound ways.

In today’s new world, Next-Gen insurers must be digital insurers. They must reimagine themselves and embrace the full breadth and depth of the mature and emerging technologies that are changing customer engagement, transforming products and services, redefining business and revenue models and breaking down the barriers to new entrants, as discussed in SMA’s “The Next-Gen Insurer: Fueled by Innovation” research report. Insurers must embrace digitalization to reshape the way their businesses approach value creation and offer a compelling customer experience. In today’s world, insurers must move from managing value chains to managing ecosystems to power their businesses as digital companies.

Many insurers indicate that they are on the strategic journey toward becoming a digital insurer. They are making investments in digital initiatives and technologies, often in a tactical and reactionary approach that is reflected in fragmented strategies and investments in technologies. Forays into new websites, smart-phone apps, agent portals, customer portals, collaboration, connected environments and social media are a start, but these can result in an inconsistent and incomplete customer experience. More importantly, they may delay the establishment of a competitive digital business model foundation with technology embedded. The issue is that these silo-based approaches lack a strategic framework that cohesively brings together the unified digital strategy that will become the driver of market differentiation, business growth, innovation, collaboration and profitability.

A unified digital strategy recognizes that all business strategies and technologies touch the customer in some way and that a one-size-fits-all channel model is obsolete. In today’s digital world, this means making a serious commitment to provide real ease-of-doing-business based on customer expectations for every type of interaction through any channel, via any device, to win and retain customers. The strategic components of a unified digital strategy will connect the right people, processes, and technologies.

The unified digital strategy is multi-dimensional and brings together areas of business strategy to drive design and develop efficiency and consistency, while providing the foundation for unified experiences across all the customer touch points, now and in the future. Each of these business strategies reflect existing, new and emerging aspects based on the influence of demographics, behaviors and technologies. The strategies include the brand strategy, marketing communication strategy, customer relationship strategy, web strategy, mobile strategy, IoT/connected strategy, social strategy, collaboration strategy and intranet strategy.

Today’s and tomorrow’s insurance customers are looking for much more than interacting online. They are looking for choice, engagement, social alignment and more. Some insurers have begun or are well along on the digital transformation journey. But becoming a Next-Gen Insurer that will be recognized as a digital leader demands both technology and leadership dimensions that move the company forward in a coordinated and effective way.

From a technology perspective, the digital insurer business architecture framework provides a transformation road map to assess and define a path that helps guide the organizational change, leveraging a wide-array of technologies from core business solutions to emerging technologies like mobile, the Internet of Things, collaboration and analytics. In the leadership dimension, digital leaders seek capabilities that envision and drive the transformation across the organization in a coordinated, consistent manner. These digital leaders work across the traditional departments and silos of an organization to ensure that the strategies are cohesive and working toward the common vision to shape a new future brought about and inspired by technology change.

Becoming a digital insurer demands leadership from the top and leadership to drive the digital transformation. This requires a unified digital strategy fortified by existing, new and emerging technologies.

So embrace the digital world. Re-envision yourself as a digital business. See the possibilities. Define a unified digital strategy that brings the business strategies and technologies together to cohesively guide your transformation. Make it happen, because the digital future is already well upon us.