Insurers have all gotten the message: Maintaining the status quo isn’t an option. Change is necessary or they face being ‘irrelevant’ in the future. Where are insurance companies when it comes to transitioning to a new way of conducting business? A panel of industry experts (Karen Furtado of Strategy Meets Action, Rob McIsaac and Don Metz of Novarica, and moderator Nathan Golia of Insurance Networking News) shared their comments at StoneRiver’s 2016 Executive Council. Some carriers have made great progress, while others lag behind.
The financial services industry as a whole is in different places. There is a fairly predictable pattern of innovation and adoption first in retail banking, with a five-year lag before that innovation makes it to P&C insurance and another five years before it emerges in Life insurance. But we’ll see if that lag time diminishes with today’s rapid pace of change. In 2015 and early 2016 there was a series of tipping points: maturity of mobile technology, wearable devices, and the drive to reach the millennial market … all affected the insurance industry.
Insurers may have a strong desire to transform and grow, but many are perplexed about how to make strategic decisions because there’s no sense of clarity on the transformation end state. There are many options and approaches on how to interact with applicants, agents, and business partners. How can insurers coalesce these into a single strategic vision?
Teamwork, Perspective, and the Future
Effective transformation only works when IT and the business team are in sync and share the same vision. When technology gets too far ahead, business teams find it nearly impossible to handle the change. Our industry is used to a mono-pace of incremental changes. But this era calls for us to be able to turn on a dime and hit the hyperdrive in an instant.
This requires a different perspective. Focusing on ratios, margins and optimizing from the inside out is over. It’s time to examine your business from the outside in, from the customer’s perspective. Understanding target markets, product positioning and market pools is critical. Your best sources may be your distributors and top producers, but more likely the best source is your product’s prospective buyer.
Figure out how to sell life insurance to people born after 1975 -- crack the code for winning over the millennials and younger Gen X’ers. There’s a large jackpot for those insurers who do.
Let a customer perspective drive change. It’s possible that a process might be manual for awhile, but don’t hide the processes. For some customers, satisfaction isn’t about faster cycle times but may be about operational transparency. Expose what they want to know. Take a page from Amazon’s service notification playbook and apply it: We received your application, we ordered the requirements, we contacted your doctor…
The reality is that nobody knows what the future holds. But it’s clear that running legacy systems tied to legacy procedures will not get you where you need to be.
Winning insurers will incubate innovative cultures using both small tactical and sweeping strategic moves. Answering questions like how entrepreneurial your company wants to become must take place at the leadership level.
If your transformation is underway, then congratulations; if not, get busy … you have everything to lose.