How to win the 2030 insurance technology challenge – For your convenience I provide a brief overview of a series of articles published by Sapiens in this E-Book. I urge you to follow this link to get the full E-Book for the more comprehensive version.
Data: Real time – or otherwise
Ex Vice President and Associate Actuary, AIG discusses the future of insurance and the challenges it faces, such as failed modernisations, legacy platforms, inward-looking approaches, and the war on talent, in the first article.
However, it also mentions a potential positive change brought by data as a key area of challenge and opportunity in insurance technology. The article emphasises the need for insurers to adapt to evolving customer needs and expectations, overcome risk-averse behaviour, and develop innovative products and services to stay relevant in a rapidly changing market.
The authors identify several themes that need attention, including emerging risks, cyber and climate change, talent and culture, world events, client-centricity, operational resilience, and new operating and underwriting models. They suggest a radical shift in how organisations operate, use data, technology, and talent.
The insurance industry has access to vast amounts of data from various sources, including satellite data, IoT data, and third-party data. However, to leverage this data effectively, insurers need a strong leadership vision, a people-centric change and development program, and the right technology and infrastructure.
The key takeaway is that insurers must anticipate and understand the future faster than it emerges to stay competitive. They need to adopt an exploratory approach to understand available tools and technologies and develop a data-driven strategy to meet their challenges and growth aspirations.
Experimenting with Innovation
In this article, ex COO of StarStone Insurance discusses the importance of innovation in the insurance industry and the need for insurers to overcome their risk-averse nature and embrace new technologies.
It highlights specific changes that need to be considered, including the impact of the war on talent, the shift from startups to scaleups, and the focus on reducing expense ratios and implementing common data and contract standards.
The article acknowledges that the insurance industry has been hesitant to adopt new technologies and innovate, despite the increasing demand for digitised and cloud-native products and services from customers. It attributes this hesitancy to the perception that emerging risks are closely tied to emerging technologies, causing concerns among insurers.
The lack of successful technology ventures in the industry is often attributed to a lack of change management and integration with existing systems. Insurers need to prioritise usability, connectivity, and integration when implementing new technologies to ensure they are widely adopted and beneficial.
The article suggests that insurers should demonstrate the high levels of usability and connectivity already available in modern technologies, creating an environment where practitioners can thrive and solve complex problems. Access to real-time data is also emphasized as crucial for supporting the underwriting value chain.
Overall, the article calls for a shift in the insurance industry’s culture and mindset, urging insurers to embrace innovation, test new software quickly, and have flexibility in adopting new technologies to stay competitive.
Are we customer centric?
The third article in this E-Book emphasises the need for customer-centricity in the commercial insurance industry.
It acknowledges that insurers are currently distanced from their end-customers and are being outpaced by them in terms of data adoption, insights, and new technologies. With the potential entry of companies like Google into the insurance market, insurers need to prioritise customer needs and develop strategies that align with them.
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The shift from product centricity to client focus is highlighted, as clients prefer a one-stop shop for their insurance needs rather than multiple policies from different distribution partners. Portfolio underwriting and analysis are becoming more prevalent, allowing for transparent segmentation and a race to attract profitable and well-risk-managed clients.
The article proposes an Amazon-style approach to insurance, where a set of customer-centric products and services are offered within an ecosystem. This includes features like loss history analytics, customer benchmarking, claims experience monitoring, connections to service providers, risk management support, pre-vetted suppliers, and a user-friendly claims portal.
The importance of coupling product offerings with services is emphasised, particularly for clients who are not at the top. The customer-centric approach aims to drive better risk management behaviour and make the insurance purchasing process desirable.
Customer-centricity is also identified as a key enabler for futureproofing in the industry. It highlights the need for employees to deliver great service, the importance of having a single view of the customer, the use of client relationship management systems for cross-selling, end-to-end automation for customers, improving the claims process, and incorporating behavioural analytics into the underwriting process.
Overall, the article stresses the need for insurers to prioritise customer needs, enhance the customer experience, and align their strategies with evolving customer expectations to stay competitive in the changing insurance landscape.
The importance of distribution in the insurance industry and the challenges associated with it is the focus of the fourth piece.
It emphasises the need for organizations to deliver on the promise of being “out of the box but tailored,” which is often not achieved. The complex requirements for global and local service, omnichannel distribution, and superior customer experiences make distribution a daunting task.
The insurance industry’s regulatory landscape adds another layer of complexity, requiring organisations to navigate multiple compliances, legal, and regulatory frameworks. To succeed globally, tailoring products and services to meet country-specific or regional regulations is crucial. Data and technology play a significant role in enabling regulatory customisation based on coverage rules and permutations.
Ensuring that a product is operationally and technically “out of the box” becomes a key differentiator in the market. Taglines such as “global where it matters and local where it counts” support the importance of tailoring products to specific markets.
The article identifies distribution as crucial for futureproofing in the insurance industry and highlights the need for easy connectivity with intermediaries’ systems to distribute products, information, and documents. Portfolio management capabilities are seen as essential to track and manage multiple distribution channels, ensuring they align with portfolio criteria. Speed-to-market is emphasised as a significant factor for success.
In summary, the article emphasisses the challenges of distribution in the insurance industry and the need for organizations to tailor their products and services to meet local regulations. It underscores the importance of easy connectivity, portfolio management, and speed-to-market as key elements for futureproofing distribution strategies.
The talent cliff edge
The final article highlights the importance of talent in the insurance industry and the challenges associated with a potential talent shortage.
It mentions the prediction that 50% of the insurance market is likely to retire in the next 10 years, creating a talent cliff edge. Additionally, it mentions unspent Apprenticeship Levies returning to the government, indicating a potential missed opportunity for developing talent.
The article raises the question of where the necessary experts will come from to fill the talent gap. It emphasises that while data, technology, and customer-centricity are important, the industry is ultimately reliant on people. However, many transformation efforts in the industry neglect to include a “people” stream, failing to address the need for reskilling and upskilling employees and guiding them through changing work practices.
The article suggests that a well-thought-out strategy is needed to bring new talent into the insurance industry and to provide effective and ongoing training programs while experienced professionals are still available to provide mentorship. This would result in a diverse and hybrid workforce with a range of skills and expertise.
Talent is a key enabler for future proofing in the insurance industry. The article suggests that organisations should design systems alongside people, empower workers to embrace change and focus on building superior experiences to attract talent.
It also emphasises the importance of creating a continuous learning culture within organisations due to the decreasing half-life of knowledge.