How Small Insurers Can Grow

Imagine for a minute that a new competitor started calling on your customers and offering the same—or better—product, coverage or services for much less cost. Are your relationships strong enough that your customers would ignore the prospect of an offering of better, faster, cheaper? Certainly, some would at least be inclined to explore the offer, would they not? No need to imagine this scenario; it’s the new reality. And in this new reality, highlighted by insurtech startups, software incubators and service accelerators, small to medium-sized insurers are going to be more challenged than ever to keep up with the extraordinary changes taking place in the industry, all while trying to achieve growth in their organizations. See also: Innovation: ‘Where Do We Start?’   It’s no secret that smaller insurers are much more sensitive to loss of business, swings in expense and loss of knowledge-based staff. This makes small insurance operations vulnerable to carriers or competing services that are working with new insurance technologies to forge new products, services and business models. In fact, a new survey of 400 global executives by Forbes Insights and Gap International, “Challenge or Be Challenged: How to Succeed in Today’s Business Environment,” revealed that 57% of business leaders across a variety of vertical markets named startups and new technologies as their biggest competitors, while 70% say they are “extremely concerned” or “somewhat concerned” as to whether their company will still be relevant and competitive in two years. What does this mean for small insurer operations? Clearly, ignoring the changes taking place doesn’t mitigate the risks down the road unless you have a micro-monopoly in a service segment. Texas recently saw the closure of a fairly large public insurance pool that couldn’t navigate the current. So, what options are there for the small insurer? Maybe there’s safety in numbers. Merger, acquisition, strategic partnerships? It’s certainly been a successful approach for many small insurers around the country, like Beta Fund in California. It’s hard to say what would work for you. Then, is combining the only option? Well, leaders of established companies, large or small, might worry less about being disrupted by a startup if they focused more on organic growth, says Pontish Yeramyan, founder and CEO of Gap International. “When you’re connected to organic growth and your passion is about growth, then you’re busy innovating and being in front of the marketplace, rather than being victimized by change,” Yeramyan said in a recent Forbes report. This means investments in modern, affordable technologies and R&D, rather than looking outward for companies that might want to merge or be acquired. Having an eye on organic growth means continuous improvements, whether by development of your staff, new products, service enhancements or innovating your business model. It also means keeping an eye on strategic vision, adopting the most appropriate technologies and staffing with the right skillsets. The Forbes/Gap report also revealed that our new demanding and shifting business environment requires a change in how leaders think and act, namely, making innovation a part of the working institution, starting at the executive level and cascading into the entire organization. Small insurers can make this modification much more easily than can their behemoth brothers. “An organization’s ability to change and innovate quickly is a key competitive advantage,” Yeramyan says. See also: Insurers Are Catching the Innovation Wave   Technology is certainly an enabler in effecting change; done right, it enables insurers to experience the hallmark of organic growth, expanding their market share and reach even further. Insurers such as Diamond Insurance Group and Utah Business Insurance, both leading regional providers of insurance coverage, understand this first-hand. Both companies implemented a cloud-based insurance software system to enable a variety of insurance processes, including policy, underwriting, billing and claims integration for compliance reporting. And by focusing on improvements in their internal abilities, both companies report that they are able to deliver greater value to their external customers. For Diamond, these changes, coupled with their hard work, have resulted in a 20% increase in revenue in just the first quarter this year. How ready are you?