Tag Archives: renaissance

The Insurance Renaissance Rolls On

It has been busy in insurance lately, as the industry continues to engage and consider the future — first at our customer conference, Convergence 2017, then at Insurtech Connect. Both conferences had record attendances, a sign that insurers are both grappling with change and committed to making it happen. It is a shifting future, one that is reinvigorating an industry that has decades of tradition. Players across the entire range of insurance industry segments are being confronted with permanent changes in consumer behavior, different employee expectations, rapidly evolving technology and a quickening renaissance of the business environment.

Increasingly, opportunities will need to be discovered because technology alone does not constitute a strategy. It is also not a plug-and-play in the sense that a new tech overlay cannot compensate for a fundamental legacy infrastructure — whether that means in the business model, products, culture, technology, market boundaries or customers. Change is being forced on insurers — whether they like it or not — as several of the orthodoxies traditionally underpinning the industry are challenged and disrupted.

Customer at the Center of the Renaissance

At the heart of this insurance renaissance is the customer. The customer’s expectations, driven by unrelated or adjacent industries, are reshaping insurance. The innovators, many coming from insurtech, are assembling new insurance products and services and are using customer-centricity as their value offering. Finally, the competition, which is heating up, is based on customers’ positive reaction to the new business models and products in the market.

This is all happening regardless of whether incumbents choose, or are able, to play in this area. Majesco’s consumer and small-medium business research last year captured these views and expecta­tions of today’s customers in the midst of the disruption and change rapidly unfolding in the insurance industry. In our Future Trends 2017: The Shift Gains Momentum report, we underscored that the insurance business models of the past 50-plus years have been based on business assumptions, products, processes, channels, etc. for the Silent and Baby Boomer genera­tions. Things began to shift with the Gen Xers, with Millennials and Gen Zers putting tremendous power to move things forward at a rapid pace. The business models of the past will not meet the needs or expectations of the future.

Unfortunately, Majesco’s research, Strategic Priorities 2017: Knowing vs. Doing, shows there is a gap between what many insurers know about the changes that are going on around them and what they are doing about them — the “knowing–doing” gap. The report highlights that turning awareness into doing, with actionable initiatives, is elusive, creating an ever-widening gap between leaders who are taking action and those who are not. And in a fast-paced era of change and disruption, the ability to be a fast follower is fading rapidly, putting insurers at risk of becoming irrelevant. Insurers should be asking themselves, “Are we acting upon our knowledge of the insurance industry and market trends? Or, are we simply educated observers?”

See also: Insurtech: One More Sign of Renaissance  

As Albert Einstein famously said, “We can’t solve problems by using the same kind of thinking we used to create them.”

The Shrinking and Shifting Future

The state of the industry in a widening “knowing–doing” gap suggests a need for increasing strategic and future planning, followed by actionable plans. Research, however, suggests an ever-shortening strategic planning horizon. The Harvard Business Review concludes that the focus on defending business models (rather than exploring new ones) represents a significant loss in future options. As we highlighted in our new report, Changing Insurance for the Digital Age (a collaboration with Global Futures and Foresight), investors value the future growth options of S&P 500 firms relatively less, by $1 trillion — for which there are 28 insurers, representing only 5% of the 500 firms. This would seem proof enough that a myopic focus generates less growth and value over the long term.

So how can insurers prepare for change and participate in the rapidly unfolding renaissance?

  • Insurers must look to customers — before technology — as the starting point for change.
  • Insurers must modernize and optimize their existing business to stay relevant with existing customers, because it will fund the future business. In today’s world, replacement of legacy systems is just table stakes.
  • Insurers must develop new business models that meet the digital-age needs and expectations and are the foundation of the future business.

Each of these paths are mandatory and increasingly necessary to ensure relevance and growth. In our Strategic Priorities 2017: Knowing vs. Doing report, Majesco found that companies that reported strong growth in the past year were 17 times more likely to also be developing new business models, compared to those that had lower growth. Nearly 90% of the higher-growth companies were also developing new products — three times higher than companies with lower growth. Those that adapt quickly will likely see new business heights, while those that do not will possibly experience dramatic market losses instead. The growth gap between leaders, fast followers and laggards will likely expand, creating an unbridgeable chasm with devastating business implications.

The Digital Age is Powering the Renaissance

The digital age — a revolution — is rewriting the rules of business and, with it, redesigning organizational and business model structures. However, as we noted in Changing Insurance for the Digital Ageonly 11% admit feeling ready to craft more “future-proof” organizations. Many industry orthodoxies are increasingly irrelevant, yet most insurers have been reluctant to reinvent themselves, with less than 25% of insurance executives expecting their operating models to be disrupted by changes in consumer behavior. Technology and customer expectations are already radically rewriting models; almost half of insurers business models are already in the process of being disrupted by new competitors. We saw this onstage at Insurtech Connect this past week, with new insurtech startups and traditional insurers creating business models and offerings.

As many companies stated at Convergence 2017 and Insurtech Connect, the perception gap of customer expectations to what we deliver cannot be addressed through the provision of technology alone. It must be aligned with strategic re-organization and customer-centricity, thereby using technology to help avoid the widening gap between own orthodoxies and customer expectations. In effect, insurers must disrupt themselves. As we have said before, “It is better to Uberize yourself before you are Kodaked.”

Narrowing the Knowing–Doing Gap

Are we acting upon our knowledge of the insurance industry and market trends? Or are we simply educated observers? Each and every day, we see the growing impact of change in the insurance industry — new products are introduced, new channels are established, new services are offered, new business models are launched, all which recalibrate customer expectations.

Acknowledging the role and strength of changing customer behavior expectations and then acting upon that awareness across the organization is central to future success. Customers are increasingly demanding personalized, on-demand, digital insurance services. In many cases, these go beyond the realm of traditional products, into providing valuable services that range from reducing risk to engaging with a community of similar customers. These services — when added to a robust, relevant product offering — have the potential to reposition insurers within the market and give them a future-focused, customer-centric edge.

See also: A Renaissance, or Just Upheaval?  

Insurance companies must stop talking about opportunities and start doing something about them by using the disruption and change as a catalyst for real change. We are entering a new age of insurance. These efforts will carry insurers into that new age, where they will be prepared to capture the revenue growth presented by a market shift that will define a new ecosystem of market leaders.

Are you taking knowledge and acting on it? Are you walking the walk? Insurtech Connect highlighted that your future competitors are.

Headaches Caused by Sharing Economy

The sharing economy, which is made up of consumers and businesses who provide on-demand services, faces particular challenges when it comes to insuring their risk while conducting business.

Simply put, the sharing economy and the short-term exchange of assets for a fee has created headaches for insurers. Think of the early days of Uber and ride-sharing insurance.

Certainly, one constant challenge that on-demand or freelance workers face, is purchasing insurance protection at affordable prices.

Since on-demand workers typically work on a per project or per task basis, there may not be a need for annual policies. Especially if there is a gap of more than 30 days between jobs.

In the sharing economy, where ride-sharing has become a tremendous service for on-demand workers, the ability to purchase automobile coverage on a per-mile basis may very well become a critical need for those who participate in this new industry.

As the sharing economy continues to expand, the ability to purchase insurance products on a pay-as-you-use basis will become even more important to the members of this new economy.

And, insurance companies will have to respond to the significant insurance implications.

Let’s go a little deeper.

Short-Term Insurance: Pay-As-You-Use

Pay-as-you-use is a fairly common economic precept in today’s technology landscape.

It can only become profitable if the consumer realizes a benefit, values its ease of use, and the variable expenses.

An example is when Metromile introduced its pay-per-mile insurance coverage; it easily appealed to the majority of low-mileage drivers who felt that they would now be treated more equitably.

See also: Insurtech: One More Sign of Renaissance  

Ride-share drivers obviously benefited from the reduction in wasted premium dollars, and they were compensated by the delivery of a personalized experience that made them feel counted.

Consumers are responsible for constructing, through their needs and desires, a digitally keen, on-demand sharing economy.

Innovative sharing economy companies like Airbnb, Uber, and WeGoLook, are turning wasted assets and labor into productive and profitable products and services.

The Insurtech Movement

Just as the Italian Renaissance took hold due to the desires and determination of dedicated stakeholders, insurtech as a concept has grown to be a collaborative movement (or Renaissance) in the insurance industry.

Yes, we just compared the Renaissance to insurtech.

The point here is, as with the 14th-century movement, these cultural shifts serve as a bridge from the old to new.

Insurtech, as a technological movement, branched out from fintech following reports of significant capital entering the market for insurance start-ups.

This massive availability of capital paved the way for start-ups and existing companies to innovate new products, services, and fresh new business models.

These models are the innovative driving force supporting the insurtech movement, and why new and existing carriers are considering new business models to jump-start a fairly stale marketplace.

Short-term insurance products are a part of this insurance renaissance.

Denise Garth’s article at Majesco.com sums this all up eloquently;

“Just like the original Renaissance, today’s Insurance Renaissance is spurred by the converging factors of people, technology, and market boundaries. InsurTech is powered by all three. Within insurance, this new Renaissance represents a real shift with significant business implications beyond legacy modernization. It represents a whole realm of new opportunities via greenfields, start-ups and incubators to cover a fast changing market landscape.”

The Big 3 Areas of Innovation and Disruption: Short-Term Insurance Implications

The sharing economy is certainly a driving force behind the expected innovation coming out of the insurance industry as companies respond to the needs of the on-demand workforce. Three areas that are most important for short-term insurance innovation are:

People

As baby boomers hand-off to Gen X, and then Gen X hands off to millennials, and the sharing economy continues to grow, expectations must be met regarding pay-per-use-products and changes in communicating resulting from technology.

Technology

Consider for a moment how often consumers use their smartphone daily to research, purchase, and access products and services. The resulting expectations that are seeded by technology continually disrupt the traditional insurance marketplace and means of distribution.

Mobile technology is the linchpin of short-term insurance as it guarantees immediate access and information flow between carriers and policyholders.

Boundaries

Traditional borders matter less and less. Technology and globalization generally simply does not value them.

Consider how car manufacturers like Tesla are looking to offer the consumer vehicle insurance as a part of the vehicle purchase.

The new business models being formed will drive additional changes in the lives of consumers leading to new expectations and innovation.

With reduced boundaries and increased information, consumers require on-demand products that suit their personal needs. Short term insurance will be a large part of this discussion going forward.

A Bright Horizon

Today’s insurers are gazing at the horizon that hasn’t been this bright in decades.

Their window of opportunity is wide open for participants to innovate and offer new business models and products to meet the needs of the pay-as-you-go culture that has developed.

See also: A Renaissance, or Just Upheaval?  

Thank you, sharing economy!

Working capital is available for those with the vision, skill-sets, and determination, whether their experience is based on insurance, technology, or other market segments.

Change is on the way, and we’d be wise to get on board lest we get left behind.

Although the growing consumer emphasis is on short term and personalized products, these industry-changing innovations are by no means short term.

They are here to stay!

How to Get There From Here?

To capture the flavor of the pace and magnitude of change during 2016, we wrote a series of blogs where we compared the dramatic shifts in insurance to what happened during the original Italian Renaissance. In reality, the Renaissance was an upheaval. It was a rebuilding of an entire society, characterized by major developments in social and cultural behaviors, science, art, trade and thought. This shouldn’t surprise us, because the word “renaissance” means rebirth. As old patterns disintegrated, an entirely new realm unfolded. The fertile soil of fresh thought provided a period of growth in fields of opportunity. By the end of 2016, we could make a case that it was not only pivotal and groundbreaking, but it was historic on the scale of a Renaissance. At no time in the history of insurance can we find one year that includes this many game-changing events AND a rapid pace of continuing advancement.

Where We Are

The insurance industry is in the midst of profound change fueled by trends that are converging and pushing a sometimes slow-to-adapt industry into the digital age. This seismic shift is creating leaps in innovation and disruption, challenging the traditional business assumptions, operations, processes, products and more of the last 30 to 50 years.

In 2017, we expect to see existing insurers and reinsurers increasingly looking for paths to grow their businesses by capturing the next generation of customers with new engagement models, products and services.

As noted in the report, What’s Hot in Technology in 2017, by David Smith, chief executive of Global Futures and Foresight,

“The raft of new technologies represents new ways of doing things yet the risk remains that many will simply attempt to overlay digital on old processes and systems. This danger, and the friction that can result from dynamic technology grafted onto static models will result in disruption and challenges. The opportunities that can flow from them, meanwhile, will continue to shape ecosystems and industries and the winners within.” 

This is a strong word of caution and warning for the insurance industry because over the last decade or so, many insurers have focused on transforming their businesses by replacing their legacy core systems with modern solutions surrounded by digital and data solutions based on traditional business assumptions. But the generational shift in buyers and rise of new customer expectations does not necessarily align with these transformations. Why?  Because many insurers did not anticipate the converging trends and the shift created in expectations and needs of a new generation of buyers. The result is a growing gap between where insurers are and where they need to be for future relevance, growth and success … thereby opening the door to fresh, culture-savvy competition.

See also: How to Transform: From the Outside-In

Where We Need To Be

Insurers, MGAs, reinsurers and others must be alert and responsive to this shift by understanding changes at play and accept that everything we have known about insurance is rapidly moving to a new normal. Underlying this shift is the customer, and in particular the new generation of buyers.

In our Future Trends: A Seismic Shift Underway report, we outlined the five generations that are foundational to the shift, including the silent generation, baby boomers, Gen X, millennials and the emerging Gen Z. Our consumer research, The Rise of the New Insurance Consumer: Shifting Views and Expectations – Is Your Business Ready for Them?, dives into this shift with more insights on the move to simplicity, transparency, engagement and digital, expected by millennials and Gen Z but also highlights that Gen X is often dramatically aligning with millennials and Gen Z.

The implications for insurers are enormous. Why? Because insurers’ business models, processes, products, services and systems have all been built for and around the Silent and Baby Boomer generations who have been the primary buyers of insurance during the last 60-plus years.  Gen X turned 18 in the mid-1980s and is entering their peak earning years and adapting to new technologies and digital. The millennials turned 18 in the early 2000s and are the first generation to grow up surrounded by digital, and Gen Z was born with digital technology. Furthermore, these two generations highlight behavior and expectation shifts in vehicle ownership, movement in jobs, embracement of the shared economy and much more, which have a huge impact on insurance needs and expectations.

New entrants have been the first to embrace this shift … Trov, Slice Labs, Lemonade, Haven Life, Quilt and more, to bring innovative business models, products, channels, process and solutions to capture this market. This has inspired existing insurance companies like Shelter General Insurance, with the launch of Say Insurance, to Berkshire Hathaway’s launch of CoverYourBusiness, to Metromile’s move from an MGA to a full insurer and more. Moves like these are necessary to compete in a fast changing market inspired by insurtech.

As evidenced by the large amount of activity in the insurtech space, many think there is a better way for insurance to work, and they are acting on this belief and getting significant capital to make it a reality. In so doing, they have the opportunity to steal substantial market share from those companies that don’t ask themselves and act on the same questions.

This is where most insurers would like to be — modern, competitive, and built-to-capture business.

How Do We Get There?

Is there a way to rapidly and “safely” transform, using our current business as the engine to drive to a new business model?

Getting to the competitive forefront requires companies to rethink their business model and realign it with the customer needs and the expectations of those who will be their customers for the next 10 to 20 years, not those from the past 10 to 20 years. It requires a new business paradigm in how we define and think about insurance, embracing business components that work in the new context of people, technology and market boundaries and discarding the pieces that are outmoded or irrelevant.

Acknowledging the need, however, doesn’t offer a concrete platform for transformation to a new future … a New Normal. A plan is needed, and, in most cases, the plan must be practical. Most organizations can’t simply flip off one switch (traditional business model and products administered on traditional systems) and flip another on (new business model and products on modern, flexible systems that will handle digital integration and better data acquisition and analysis). So, the shift will require steps. Those steps will operate as both a bridge and a proving ground, while the traditional system is still operational as a firm foundation while the new foundation is being constructed.

Majesco encourages insurers to think in terms of a three-pronged modernization.

  1. Keep and grow the existing business, while transforming and building the new business.  

This is crucial. Marketing and distribution shouldn’t pull back from traditional business in anticipation of the launch of new business models, new products or new channels. Insurers shouldn’t stop pushing for more business of a particular type until or unless new products clearly nudge them out of existence. The current business is funding the future and needs to be kept running efficiently and effectively as the market shifts.

  1. Optimize the existing business while building the new business.

A customer engagement improvement is ALWAYS an improvement. If your teams have been working toward placing digital front ends on the traditional business to engage customers, don’t stop in the middle of the bridge. Any process that can be optimized on the traditional side will help to maximize the existing business, reduce the cost of doing business and provide a bridge from the past to the future while beginning to enable realignment of resources and investment into the new business. These are very often the incremental changes that will also gently shift your customer base through new ways of doing business.

  1. Develop a new business model for a new generation of buyers.

Some insurers have made the mistake of envisioning their digital front end as their big leap into the future, not realizing that they have only just touched the new landscape. They need a strategy with a plan for a new business model that supports simultaneous leaps forward that will create new customer engagement experiences underpinned by innovative products and services that will create growth, competitive differentiation and success in a fast-changing market dynamic.

See also: 5 Topics to Add to Your List for 2017  

These three focal points comprise “the new normal” for insurers.  Keep, grow and optimize the existing business during the creation of the business that fits tomorrow’s shift-on-the-demand insurance culture. A new generation of insurance buyers with new needs and expectations creates both a challenge and an opportunity. There is no clear path or destination. The time for plans, preparation and execution is now — recognizing that the customer is in control. Those who recognize and rapidly respond to this shift will thrive in an increasingly competitive industry to become the new leaders of a re-imagined insurance business that aligns to a rapidly growing, millennial, Gen Z and Gen X customer base.

Insurance companies must stop talking about the opportunities and being digital, and start doing something about it by using the disruption and change as a catalyst for “real change.”  We are entering a new age of insurance. These efforts will carry insurers into that new age, where they will be prepared to capture the revenue growth potential presented by the rise of the new insurance customer.

Insurtech: One More Sign of Renaissance

Just before the Italian Renaissance, guilds were formed in Florence and throughout Italy to bring together people of like occupations under a social network. Their purpose was to agree upon standards and rules, represent the group to government, improve upon their art, science or trade and provide support services to families and widows when needed.

Working together, these guilds fostered Renaissance attributes. They were patrons of the arts. They contributed to the advancement of medicine and technology. They advanced construction methods and learning in all spheres. In fact, the end of many guilds was brought about when they were merged into universities. The Renaissance created a cultural bridge from the Middle Ages or past to modern history.

However, the Renaissance didn’t just sprout up overnight. It was spurred on by a convergence of factors, the greatest of which was increased wealth. Trading in Florence had produced a new class of financier who was willing to fund artistic and scientific endeavors. Wealth created ease. Ease allowed time for thought and innovation.   Innovations in practical sciences, such as mathematics and architecture, benefited from broader thinking. Fast forward to today, and the comparison to that time is striking, with a similar influx of money and a new class of insurance technology investment via insurtech.

Insurtech as a concept has grown to become, not an official organization, but a collaborative movement. It has become a bridge from the old to new being created in the insurance industry today.

Insurtech:  A New Era of Innovation

Insurtech as a movement branched out from fintech (financial services focus) earlier this year following reports of significant capital entering the market for insurance startups … from insurers and MGAs to technology providers. Significant capital investment in insurtech for new insurance greenfield or startup companies is fueling massive innovation in products, services and business models and de novo options. These de novo options are a driving force underpinning the insurtech movement and why new and existing companies are looking to new business models to innovate, test ideas and bring new products and solutions to market.

See also: The Insurance Renaissance (Part 1)  

A host of venture-backed startups have propelled property & casualty insurance tech investment deals to a new high in 2016, with total funding to insurance tech startups topping $1 billion in the first half of 2016, according to CB Insights. 63% of deal activity to the insurance tech market went to U.S.-based startups in the first half of 2016.  Startups that distribute policies or provide software and services across the P&C insurance value chain have risen 50% compared with all of 2015. And life insurance is now also ramping up.

We saw an innovation movement in spades last week at the much awaited InsureTech Connect Conference in Las Vegas, which brought together more than 1,500 entrepreneurs, technologists, venture capitalists, insurance executives and startups. The energy, engagement and enthusiasm were infectious. It had the feeling of the “dot com” era… but with more substance. This gathering sent a clear message to the insurance industry, that we have rapidly entered a new era that is more profound and important… a renaissance. It has placed the importance of innovation and technology on a stage and signaled that, from here forward, insurance must and will be innovating. But like the forming of guilds, insurtech demands cooperation and conversation.

InsurTech and Insurance Renaissance

Just like the original Renaissance, today’s Insurance Renaissance is spurred by the converging factors of people, technology and market boundaries. Insurtech is powered by all three. Within insurance, this new Renaissance represents a real shift with significant business impli­cations beyond legacy modernization. It represents a whole realm of new opportunities via greenfields, startups and incubators to cover a fast-changing market landscape.

In our view, based on our Future Trends – A Seismic Shift Underway thought leadership report in January 2016, and picked up by many in the insurtech movement, there are three main areas of impact:

  • People – Expectations, products and business models that were built around the silent and baby boomer generations, do not meet the millennial and Gen Z expectations or needs. More importantly, Gen X is the “swing group” tipping with millennials and Gen Z. These changes in people’s lives drive changes in their expectations and their risk profiles/needs, reflected in our coming primary research on customer expectations for individuals and small business owners.
  • Technology – How often do you use your smartphone in your daily life for researching, buying, servicing and convenience? Think Amazon, Uber, news and music. These new expectations drive businesses and institutions to use technologies and processes to develop new business models and channels, which give customers the capabilities they’re seeking.
  • Market Boundaries – Market boundaries are being erased. New competitors and new channels are at the forefront of the insurtech movement. Consider how the largest number of startups are build around new distribution options. Then think about how existing and new businesses from Tesla, Ford and Trov are looking to offer insurance as part of an auto purchase. These new business models and capabilities will drive additional changes in people’s lives, leading to new needs.

Insurtech Leadership and Options

As we have tracked, observed and talked to our customers and other influencers/leaders in the industry this year, we are convinced this is not a “new fad” but a movement with substance that is just getting started. Unlike the “dot com” era, many of the insurtech participants have real capabilities, real business plans and real substance in how they can enable the industry through our renaissance to meet and exceed the expectations of our customers.

But it requires leadership, vision and active collaboration/participation.  Standing on the sidelines waiting to be a fast follower or thinking you can do it yourself will likely not work this time.  What is different?  Chunka Mui reminded our customers at the Majesco Convergence Conference, just before InsureTech Connect, that the industry is moving at such a rapid pace that the gap between today’s technology and future technology possibilities is being filled by insurtech active participants. From here forward, tech advancement won’t slow to allow followers to catch up.

See also: The Insurance Renaissance, Part 2  

It is an exciting time for the industry…a time of great change, challenges and opportunities.  While insurers have different strategies and paths to their future, we are convinced that insurtech will be a big part of that future and are committed to helping shape, embrace and engage in the movement to enable the renaissance of insurance.

A Renaissance, or Just Upheaval?

When people think of the Renaissance, they most often consider shifts in art, architecture and a period of calm European advancement. In reality, the Renaissance was an upheaval. It was a rebuilding of an entire society, characterized by major new developments in social and cultural behaviors, science, art, trade and thought. This shouldn’t surprise us, because the word “renaissance” means rebirth. As old patterns disintegrated, an entirely new realm unfolded. The fertile soil of fresh thought provided a period of growth in fields of opportunity. Today’s renaissance in the insurance industry shares many of the same characteristics as the original Renaissance. Both represent fresh beginnings brought about by new ways of thinking, new methods, new technologies, new behaviors and new resources.

The Role of IT in Rebirth — From Incremental to Incubative

So, how is IT changing within the insurance renaissance? For the last 5-10 years, the primary focus of IT vendors and internal IT departments was modernization of the legacy environment … from the architecture and infrastructure to core systems as well as supporting the business with incremental new product development, enhancing agent channels and streamlining operations. The assumption was that the insurance industry was essentially the same year to year. Improvements were incremental. Competitive advantages lay in marketing, products and within the excellence of operations and underwriting. IT was successful if it just kept up with incremental operational needs.

Today, competitive differentiation has moved well beyond incremental operational needs because the insurance industry itself, as a part of its renaissance, is undergoing a complete dismantling of industry foundations — and a rebirth that is restructuring the competitive landscape with a new set of ever-shifting guidelines. Like the first Renaissance, it encompasses major new developments in social and cultural behaviors, science, art, trade and thought. But its most striking development is the entrance of a thousand new interrelated entities. This would encompass greenfield companies, startup insurers, fresh investors, tech startups, industry incubators and new technologies that have never been used in insurance before. The industry isn’t just being reborn; it is being reborn into a different competitive landscape … one that will be dramatically different than the past. And IT is at the center of this new world. IT is a driver, a partner, an enabler and a competitive innovator — but only if it is prepared to fill these roles.

See also: The Insurance Renaissance, Part 5  

The new world of risk, customer expectations, new technologies and more will not allow, let alone succeed with unlimited incremental changes without a wholesale rebirth. When increments are built on legacy foundations – from legacy thinking, legacy customer expectations, products and legacy insurance technology solutions, the increments tend to pile on an already ineffective IT foundation…making it even more unwieldy, unmanageable, and costly.  IT can’t be an innovator if it is encumbered by legacy culture.

The new world of insurance will, however, allow for and welcome incubation and innovation as alternatives. Incubation provides a space for the custom-fitted creation that will match new world insurance needs. It assumes quick-hit tests in smaller markets with niche products for niche segments. Incubation connotes a level of pre-design thinking that will anticipate quickly-changing market demands. Incubation isn’t tied to the past…it is creating the future.  An organization prepared to incubate its new ideas quickly is an organization ready to be reborn into the industry population. Its framework for transformation will have anticipated the need for a different insurance technology foundation.

Incubation also allows for multiple ideas to grow, independent or connected. In the new world of insurance, savvy competitors will be marked by their ability to fill a perpetual pipeline of innovations with incubations created inside the organization, through partnerships or purchased from outside the organization.

The Role of Tools in Rebirth — From Growing to Groundbreaking

The magnetic compass and the nautical clock changed navigation. The transistor enabled most of our advanced electronics. The database improved every industry’s capabilities to know and interact with customers.

Closer to home we recognize that innovations have often fueled our biggest changes in insurance. Blood tests allow life insurers to more accurately accept risk and price policies. Motor vehicle records allow auto insurers to validate their insureds’ driving records. Location-specific data makes commercial insurance underwriting much easier. These tools have allowed insurers to improve what they do … not reinvent what they do. But today’s new technologies offer an opportunity for the insurance industry’s rebirth, seen with the new business models and assumptions from startups and greenfields that are creating new leaps forward with products, customer engagement, service and much more. These new companies are redefining and simplifying insurance, rather than just layering on incremental improvements.

There is a difference between tools that foster incremental improvements and tools that erase previous notions and create a new paradigm of competition and expectations In today’s technology climate, insurers will still use tools that foster improvements, but they will incorporate the new tools that will erase previous notions.

See also: Inventing Your Future: A 3 X 3 Approach  

The term “tools” is a catch-all for a mind-bogglingly wide range of devices, sensors, software, processes and data management and analysis capabilities. These items are creating insurance impact and they are a large part of the reason that insurance is undergoing a renaissance. As these new tools come into common use, insurers will use them to break new ground in product development and service. Connected home sensors are a great example. They are not in wide use yet. But once homes are truly connected for the purposes of both economy (power consumption) and security, they will dramatically impact residential insurance with the groundbreaking ability to protect, predict and prevent homeowner loss.

Are residential insurers prepared for this rebirth? Is their digital footprint ready for connected policyholders? Are integration points ready? Can we capitalize on the new tools? These are the types of questions that insurers should be asking themselves now in preparation for their own rebirth.

The Role of System Solutions in Rebirth

Because greenfields, startups and incubators will play such a dynamic role in fostering change, we’ll look at their impact upon distribution, their potential as partners and the business models that will help them to succeed. We’ll look at how medium to large insurers are pursuing their own greenfields and building their own incubators and we’ll explore the types of systems and solutions that will enable them to thrive. We will also look closely at how insurers can blaze their own trails in customer service and channel development, while simultaneously giving their customers a consistently excellent experience.

Innovation isn’t about entering a new world of complexity with sophisticated solutions. It is about finding the simplicity and relevancy that engages clients and prospects across their needs.