Tuesday, December 6, 2022

It’s 2030. Here’s How Innovative Insurers Remained Standing

It’s 2030 and the world has undergone a paradigm shift. A shift driven by COVID, Digital Acceleration, Climate Change, Armed & Social Conflicts, and Economic and Demographic Shifts. Here’s what the insurers still standing understood and how they avoided falling into the Chasm of Irrelevance. They knew the future wasn’t waiting.

Winds of Change

Demographics Multigenerational Workforce, Lifestyles, & Values

Our demographics are changing. 5 generations are in the workforce with different needs, lifestyle preferences and values. Older generations have traditional work expectations. Newer generations seek a lifestyle, products, employment and employers aligned with their values.

Urbanization / De-Urbanization

The trend toward urbanization had been growing, until the pandemic hit. It’s now in flux. How this settles out will depend on the ability of cities to  ensure the safety and well being of their populations. Some future scenarios predict a bifurcation of cities into mega slums, and centers for the wealthy.

Hybrid Work Environments

The pandemic has forever changed how and where we will work. Most employees working remotely don’t want to return to work full time in the workplace.  As technology and productivity measurements improve, this trend will continue to grow.

Social, Military, & Personal Conflicts

Tensions are on the rise in multiple dimensions. Social, Military, and Personal. Those will impact supply chains, workplace and worker safety and mental wellness.

Emerging Technology

Digital Acceleration

By some assessments we have been catapulted 5 – 7 years into the digital future. Every business is now a digital business and expects their partners to be as well. Mobile access, speed, accuracy, ease of use, 24/7 availability for support are now table stakes. The profit and revenue gap between digital leaders and laggards is only growing larger. The fast follower approach is no longer viable.

Cloud & SaaS Based Computing

Cloud and SaaS based computing coupled with APIs and Microservices is a requirement. They are rapidly reducing the cost to maintain and operate company systems and enabling them to respond faster to changing customer and business needs at internet scale and speed.

Smart Everything & 5G

Homes, industrial equipment, autos, appliances, consumer products are becoming smarter. 5G is dramatically increasing the speed with which data can be exchanged. Data for sensors, IoT devices, AR & VR, smart cities, buildings, equipment, video from drones, robotics, business processes and more will be exchanged, analyzed and acted on in quantities and speeds never seen.

Digital Ecosystems & The Platform Economy

Digital Ecosystems are blurring industry boundaries. They provide access to markets, services, solutions, and data with a scale and ease never possible before. They enable holistic services to be launched on a global scale and give birth to entirely new forms of business and industries.

Big Data, AI & Machine Learning, and Automation

All of this is giving rise to more data and rapidly maturing AI & Machine Learning and Automation. These capabilities are accelerating the Data Driven enterprise, new products and business models and Hyper personalization of customer engagement & service and the transition of work from humans to machines.

Innovative Insurers Knew The Future Wasn’t Waiting.

Insurance leadership teams still standing in 2030 recognized innovation and agility was a baseline requirement to survive and thrive in a world undergoing rapid and continual change. They made a corporate decision to step 8 – 10 years into the future and begin the work of investing in the vision, strategy, business and solution models that would deliver exceptional relevance and value to their customers.

Customer Centricity – The Outside In Approach

Leaders knew to be viable they had to get to the future before their customers. They invested in understanding how the trends redefining our world would change how their future customers lived, worked, played, learned, & loved. They created scenarios that highlighted their changing needs, goals, and values. Then they identified the risks and challenges that would stand in their way. Next they asked what experiences, services, solutions and rewards would help them address those in a holistic way.

Finally they asked what digital ecosystems their future customers would be a part of and how they as insurers could work collaboratively with the participants in those ecosystems to deliver breakthrough value to their future customers and partners.

Connected, Agile, & Holistic Solutions

Our future will be digitally connected. Our homes, businesses, communities, transportation services, cities, and our bodies will be connected in ways we are only now beginning to imagine. The future leaders understood that to create value their solutions, partnerships, and business processes had to be intimately connected to that digital world. They also knew that customers would expect holistic solutions that blended and interacted seamlessly and effortlessly with their lives as they navigated the continual changes in their lives and the world around them. Further, they knew their solutions would need to help predict those changes, prevent related risks and proactively help their customers understand, mitigate and recover from them.

Personalization, Understandability, and Transparency

Leaders recognized that data driven hyper personalization was critical to how they engaged and supported customers. They understood that these future customers would share data when it created value for them. They knew they needed to earn the trust of customers to get them to share their data. That meant learning how to communicate with the customer using terms and speech patterns their customers could relate to contexted within their lifestyle, culture, and values and preferred communication channels. It also meant that they needed to double down on transparency. Transparency that included what the policy did and didn’t cover, process transparency, and the values their company operated on from an environmental, social, diversity, and governance standpoint.

Underwriting

These insurers didn’t avoid emerging risks through exclusions, instead they embraced them and underwrote them. They embraced Automation, Big Data and AI  and increased the speed and accuracy and profitability of their underwriting. They also began continuous underwriting using the data from connected solutions. Instead of just underwriting for risks, they underwrote prescriptively which included recommendations for solutions, apps, or services to help customers achieve their desired goals and outcomes.

Claims and Fraud Detection

They applied the same digital capabilities and connected data sources to claims and fraud processes. They also provided personalized, value added services that surrounded the customer to help them recover and or manage their way through the situation. They used parametric models and digital payment mechanisms to accelerate delivery of settlements. They recognized that customers are won or lost in claims processes and emphasized transparency and real time communications.

Digital Transformation 2.0

Digital First Leadership

As was said earlier, leaders recognized the future wasn’t waiting. Boards of Directors, CEO’s, and the entire C-Suite took the reins of digital transformation. They became obsessed with understanding the future and what it would take to create value in it. Building a Digital Culture became a priority in everything they did. Training, hiring, decision making, compensation, and who they promoted. They committed to and rewarded their organizations for continuous learning, experimentation, and transformation.

Employee Engagement

They placed a tremendous emphasis on engaging employees in the re-visioning their customers, business, and transformation efforts. They invested in giving them the skills required to succeed in the digital future. They also fired those that continued to subvert investments in the future in favor of the status quo.

Small and Fast Beats Large and Slow

Leaders rallied the organization around a common vision of how they would deliver value in the future. They used a stage gate investment process along with an Agile methodology to build a portfolio of small fast innovation and transformation initiatives across the company. They managed the portfolio to optimize return by pivoting or killing projects that didn’t produce. Experimentation and failing fast and intelligently is rewarded.

Becoming an Interoperable Componentized Platform

Driving growth and profits in the future require the insurers still standing to become a digital platform. A platform that interoperated digitally in real time with the ecosystems supporting their customers. It required becoming a modular insurer whose platform components could be easily integrated into other platforms in the Digital Ecosystems surrounding insureds.

Their platforms were able to be continually updated as new data, solutions, devices, and best practices enter the market. That required investing in cloud-based componentized systems that connect to the world through API & Microservices platforms. It also required an enterprise-wide investment in data acquisition and management, analytics, and AI & Machine Learning. And it required extending the knowledge about risks, mitigation and optimized outcomes out to the digital edge of engagement with customers, partners, services providers. And it required them to implement iron clad cyber security and privacy protection throughout that extended environment.

Partnering with Insurtechs

The other thing the leaders still standing understood was that their organizations couldn’t possibly keep up with all the innovations taking place on their own. They needed help. And so they made learning how to successfully partner with smaller, younger, faster firms a center of excellence within their organizations.

Acting Like The Future Was Already Here.

What truly set these leaders apart was the urgency they instilled throughout their organizations to act as though the future was already here back in 2022. They immediately set their organizations to work creating a vision and small initiative after small initiative to get to that future before their customers and competitors. They understood things would change, so they built the ability to anticipate and quickly shift to meet the new needs and opportunities that emerged into their culture and infrastructure. That became far more important to them than holding onto the past.  I hope you will join them.

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