Weekly Wrapup: Insurance CEOs prepare for disruption
The Weekly Wrapup is an analysis of the week's insurance news from the editors of Digital Insurance.
Insurance CEOs see their industry as one of the most subject to disruption, but are optimistic for its future as they emerge from the onslaught of an initial wave of challengers.
That's according to PwC's CEO survey, which interviewed more than 1,200 top-level executives across industries. Enough insurance leaders identified various factors as "very disruptive" to beat out banking, capital markets and technology, only lagging behind communications and media businesses in being buffeted by disruptors.
The increasing digitalization of the world and customers' expectations is predictably one of the top concerns CEOs have: 85% said they were "extremely" or "somewhat" concerned about "the pace of technological change," which was less than regulation and cyber-threat concerns, but more so than geopolitical factors. At the same time, though, insurers appear to have grown increasingly comfortable with their place in this new ecosystem. That is manifesting in an increasing willingness for insurers to recognize their own technical shortcomings and partner with the emerging cohort of insurtechs, rather than seeing them as a threat to their business. Nearly half of respondents said they were "planning a new strategic alliance or joint venture to drive profitability and growth over the next 12 months."
"Among the many reasons for the positive outlook is that the anticipated disruption from incoming competitors hasn’t materialized to the extent that was feared," the report says. "Indeed, partnership with new entrants rather than rivalry is the order of the day."
One cause for concern -- and a potential motivation for increased partnership activity -- is insurance CEOs' pessimism about being able to recruit digitally adept talent to develop the capabilities they want in-house. More than 80% of insurance executives said they were concerned about the digital talent in their organization or in the industry at large; a greater percentage than any other industry sector PwC surveyed.
"It isn’t just digital skills that are in demand, but also the creativity and emotional intelligence needed to innovate and reconnect with customers," PwC says. "Bringing these capabilities together within a[n]... organization demands a combination of emotional and technological capabilities."
To that end, insurers are taking several steps to make their organization more attractive to digital talent. "About half of the insurance CEOs reported making strong efforts to attract and retain these ‘renaissance people’ in areas such as modernizing the working environment and shifting employer brand perception," PwC writes. "But there are also opportunities to take this further. There is room to expand already-existing programs, in addition to other, obvious steps such as improving compensation and other perks."
An indication that insurers are looking to broaden their profile in the digital world came from South by Southwest this week. USAA sponsored the event's Venture Pitch Competition, which saw P&C president Wayne Peacock on the judging panel along with representatives from the venture capital and technology worlds. USAA's presence -- and choice of judge, an insurance-specific executive with a history of innovation -- shows how seriously insurers take the innovation and digitalization challenge, and want to be present in as many of the conversations as possible.