A balancing act for insurance tech priorities
Senior executives at insurance companies, like their peers in other industries, are charged with developing and executing the right set of strategies that will lead to success. In years past, strategists at insurance companies have had at their disposal a relatively standard array of strategies to chose from, their job being to prioritize and balance the investments and resources devoted to each. Do we expand our distribution channel network? Put more focus on new products and services? Modernize our foundational policy, billing, and claim systems? These questions and others were the traditional types of questions that executives had to address. Those traditional areas are still important and must be part of the mix for modern insurer strategies. However, a new class of strategic initiatives has emerged that is growing in importance. Now, insurers must consider how to incorporate digital transformation, InsurTech, emerging technologies, and others into their business and technology strategies. These “New World” initiatives are poised to reshape the insurance industry, and it is essential that every insurer build them into their plans. A sizable challenge ensues – combining the traditional strategic initiatives with these new world initiatives into just the right blend to make each company successful, today and in the future. This is the new balancing act that executives must tackle – and some may feel like they are teetering on a high wire.
SMA has been tracking the evolution of insurer’s strategic initiatives for many years. The changes in these initiatives paint a picture of an industry in transformation and are highlighted in a new SMA e-book, Strategic Initiatives in Insurance, 2018 and Beyond. The e-book covers the different paths that property/casualty and life/annuity insurers are taking and identifies how companies are prioritizing twelve strategic initiatives (five traditional, six new world, and innovation, which spans the old and new).
Several interesting phenomena are occurring. For one thing, there are more and more executives that consider their companies to be in transformation mode, actively trying to redesign and reshape the company for higher growth in the digital age. In addition, both innovation and digital have swept over the industry like a tsunami. About 90% of insurers have significant initiatives for digital transformation and corporate-wide innovation. CEOs feature their digital strategies and investments in their letters to shareholders and earnings calls with Wall Street financial analysts. Chief Digital Officers are a hot commodity in the industry. Regarding innovation, more insurers are trying to move beyond the early stages of innovation to create a broad-based culture of innovation that is sustainable and organic. One other interesting development is the clear recognition that core systems must be modern to support the demands of a digital, connected world. Modern policy, billing, and claim systems are the essential enablers that allow insurers to capitalize on the opportunities for new products, new channel partners, new business models, and significant operational improvements.
Finally, it is fascinating to observe the industry as it engages with InsurTech and emerging technologies. Not that long ago, technologies like mobile and analytics were considered “emerging.” Now they are table stakes and supportive of a new class of technologies like artificial intelligence, drones, the Internet of Things, and many more. The InsurTech movement has exploded onto the scene, with well over a thousand startups relevant to the industry. The industry is increasingly engaging with InsurTechs and exploring emerging tech, with each company prioritizing based on their lines of business and business models. This year – 2018 – is likely to be an exciting one for the industry as the transformation continues. Stay tuned for interesting developments as insurers execute on their strategic initiatives.
This blog entry was reprinted with permission from SMA.