At the 2012 Insurance-Canada.ca Technology Conference (ICTC), Craig Weber, CEO of Celent, discussed “Creative Disruption in Insurance”. Craig got high marks for his presentation. Interestingly, some of the conclusions of the presentation dovetail with our read of trends in insurance and technology in Canada.
First, what is Creative Disruption? According to Craig, the next logical step in a continuum that began with Michael Porter’s concepts which provided an analytic framework for business strategy development, identifying tradeoffs in performance of activities that define a business model. This was followed by work by Clayton Christensen and Michael Raynor which focused on breaking those tradeoffs with disruptive innovation.
In Craig’s mind, the key elements of creative disruption are:
Technology changes the “productivity frontier”
Success in fringe markets sets the stage for “up-market march”
Celent’s research suggests that Insurance is a prime target for this approach and a recent survey of insurance executives found that 94% of respondents said that creative disruption had value and should be fostered. Significantly, the highest rated candidates for creative disruption were outward fading: Product Design Features and Channel Experience.
Celent’s research also suggests that there are 3 main factors that either enable or inhibit the positive impact of disruption: Leadership, Corporate Culture, and Technology. In Celent’s research, the self assessment by insurers suggested that of the 3 factors, carriers felt the Leadership structure and function was most enabling, while Technology was, relatively, the most inhibiting.
Craig’s conclusions about Disruption for insurance are:
- It is a necessary part of competing. Betting on the status quo is not viable, long-term. Nor are purely incremental improvements.
- It must be led from the top, supported from the middle. The c-suite drives it, managers sell it, the front lines execute it.
- It must be kept in balance with operational concerns. Project outcomes (see framework next slide) will tend to land in all three rings. But most companies need at least a handful in the Disruption ring.
- It is mostly a mid-term opportunity. Managing technology and culture change is never a quick fix.
It is significant that the two elements Celent puts firmly in the ‘Disruptive’ ring – Social Media and Telematics – are two of the main trends that Insurance-Canada.ca sees in the 2012 insurance-technology environment.