At the halfway point of 2013, several analysts are beginning to forecast 2014. If they are to be believed, it might not be the best year for those organizations that have not yet fully embraced advances such as consumer-facing technologies, predictive analytics, enterprise content management, etc., or who have espoused a “fast follower” approach in name only.
We’d like your opinion. Are we at the point where the die has indeed been cast, or are these warnings the cries of Chicken Little?
2014 is a ‘Pivotal Year’
CEB TowerGroup recently published a report entitled Insurance IT Roadmap. Karen Pauli, research director for CEB TowerGroup shared her thoughts on a this report with Justin Stephani, Associate Editor at Insurance Networking News. According to Pauli, “2014 is a pivotal year, which means 2013 is a research year, a budgeting year, and then a lot will happen in 2014,” she said, continuing”I think at the end of 2014 we’re going to see leading carriers very well positioned to change business models, to think like the consumer, like the distributor, and then respond.”
Pauli referred specifically to “business management technologies —predictive analytics, consumer marketing analytics, BPM, enterprise content management, and so on.” Pauli also suggested that cloud technology would be “table stakes” as a supplemental technology. Significantly, Pauli believes that the focal point must shift to external audiences. “The consumer and distributor value chain must be the starting point for all technology value assessments,” Pauli said.
How Fast is a Fast Follower
Mike Fitzgerald, Senior Analyst with Celent, has also been looking towards 2014. Writing on the Celent blog, Fitzgerald notes that at the recent IASA conference, several insurers engaged him in conversations about innovation and how they intended to continue to follow their strategy of being ‘fast followers’ with innovative technologies.
Fitzgerald writes: “Based on Celent’s work over the past year, fast following is not the same as just following. It is an innovation strategy that requires specific actions in order to be successful.” Specifically, the organization has to commit resources to follow technologies in the market, evaluate results according to specific, predetermined criteria, and be prepared to adopt accepted solutions in a timely fashion (“how fast is fast”).
Failing to have and follow these guidelines means that the organization is not a ‘fast follower’, but a ‘follower’, which Fitzgerald is quick to point out is an option itself. The follower just has to be prepared for the consequences. Fitzgerald writes, “As technology continues to change insurance, following will increasingly result in reverting to the mean — average to sub average ROE or return on surplus and increasing adverse selection.”
As an example, Fitzgerald points to predictive analytics, noting that, “Innovator and fast follower insurers have used this technology to refine their pricing and leave follower insurers with the worst risks. Fitzgerald says this isn’t the worst case scenario for the followers: ” Making a conscious decision to end up in such a situation is not good, but is better than ending up there as the result of randomness and a lack of focus.”
What do you think?
Both Pauli and Fitzgerald are pointing to 2014 as a watershed year. Are you seeing that as well? The analysts are suggesting that the emerging technologies will be determining factors in results. As you plan for 2014, is this being factored into to your business plans.
Take the lead and let us know what you think.