Innovation is a crucial strategic mandate that is defining a new era of winners and losers. From retail to entertainment and everything in between, decades of business traditions and assumptions are toppling because of change – change that runs the gamut from customer behaviors and expectations to the use of new technologies. This level of change and disruption is unprecedented in the history of the insurance industry. And the pace just doesn't slow down: new technologies, the mash-up of technologies, new uses for these technologies, new competition, new customer behaviors, needs and expectations. These changes are demanding a new and responsive insurance industry.
At the same time, the impact of influencers is escalating -- from both inside and outside the industry -- and the explosion of data, the lifeblood of insurance, is creating new challenges as well as opportunities. This blitz is challenging and disrupting sacred business and operational models and assumptions, requiring new thinking, experimentation, the adoption of new technologies and yes … innovation. Many insurers, large and small, are grappling with getting their heads around how the business of insurance will change in the next three to five years.
While looking to the future has long been a part of our very culture, our ability to envision the future for insurance companies is often stymied by the priorities and challenges of today. However, if we want a future, we must rethink how we embrace innovation as the core of the Next-Gen Insurer.
A Next-Gen Insurer must reimagine the core components of insurance – the business models, products and services, infrastructures,and customers. All need to be underpinned by a culture that embraces collaboration, transformation and innovation. Forward-thinking insurers are defining what they will look like three, five and 10 years from now, planning how they will respond to influencers within and outside the industry, the path they will take to get there and the relationships that will fuel the journey.
Many insurers are on the journey, but they are going at different speeds and focusing on the different priorities that will uniquely differentiate and position them as market leaders. Some are reimagining the fundamentals of insurance, while others are retooling products, services, distribution and processes. Regardless of the approach, becoming a Next-Gen Insurer is a long-term, enterprisewide endeavor. It’s important to think big even though actions may start small.
So how to begin?
First, recognize that the innovation journey has started, with or without you. The longer you wait – the more difficult it becomes, and the more likely it is to be detrimental to your long-term business. Insurers must define their unique vision for how they will evolve into a Next-Gen Insurer by examining the fundamentals of the insurance business and determining how new levels of agility, flexibility, creativity and competitiveness can be created. There are four critical business components that insurers must reshape in their Next-Gen Insurer model: the customer, products and services, infrastructure and business model.
At the same time, companies must identify, track, assess and define how to respond to or leverage key influencers and trends. Prioritize them, developing scenarios and plans of action, experimenting and collaborating. This is paramount, not just for competitive advantage but for long-term survival. The coming years promise unparalleled opportunity for insurers to increase their value to their customers. Those that best capitalize on the key influencers will realize the most in rewards. In contrast, those that do not prepare for the future will find themselves falling behind, losing both competitive position and financial stability.
Equally critical is recognizing that no business, regardless of size, can go it alone and expect to lay hold of all the possibilities and reap all of the benefits. Most insurers lack the time, expertise and resources to track all of the influencers unless they engage outside industry resources. Insurers must identify partners who can mobilize an ecosystem of both internal and external relationships and resources to capture potential, change legacy cultures and enable the ideas and technologies that can be uniquely deployed within their companies to create their Next-Gen Insurer.
But most importantly, create and nurture a culture of innovation that starts at the top and is seen, heard and acted upon each and every day. Begin by identifying those within your organization who are the outside-the-box thinkers: those renegades and dreamers who can be advocates on the journey.
The innovation journey toward reinventing the business of insurance has started. Don’t delay, because what is innovative today will be expected tomorrow.
Begin your journey today -- to ensure that you have a tomorrow.
For information about a detailed report on the Next-Gen Insurer, click here. To learn more about where the leaders in the industry are in their innovation journey, consider attending the 2014 SMA Summit in Boston Sept. 15, 2014.
