For most of us, in our private lives, rapid change has become a given. How many of us had heard of Facebook or Myspace ten years ago? In 2008, you had to be extra cool or a geek to have a Smartphone – today you are almost seen as a Luddite if you don’t. We store our music and pictures on the Cloud. We stream our movies and shows. We expect our access to products and services to be tailored. We don’t want ads, we want to know what other people like us bought. Many of us have become part of the Sharing Economy. We have adapted to the changes around us.
Businesses, especially insurers, are having much harder time with these changes. How much harder? And what are leaders doing differently to adapt? That’s what the most recent IBM Institute for Business Value study, “Winning strategies for insurers: How industry leaders are excelling outside the comfort zone,” published in July 2014, set out to explore. We interviewed 80 insurers globally on their strategic choices and analyzed what leaders – either those that grew stronger than their markets, or those that were more profitable than their markets – did to differentiate.
The results in short: leaders are more focused, more proactive and more analytical.
Leaders know who they are and who they want to be – price competitor, quality competitor or any other of the five basic strategic archetypes we show in the study – and they focus their strategic capabilities to support their type. These capabilities come from defined strategic dimensions: customer, interactions, services and structures, which leaders tailor to fit their specific needs. For example, a price competitor will focus on cost; they will concentrate on price sensitive psychographic customer segments, will reach out to them through online and mobile interaction points, promote simple and standarized products and services and streamline infrastructure and operations.
Many insurers do not want to be leaders, but are content to be fast followers. Nothing wrong with that – as long as you take the „fast“ part seriously. That’s why is it important to be proactive – it is self-reinforcing. Creating flexibility frees up ressources; it allows you to stop worrying about legacy upkeep and start thinking about adapting to your changing customers.
No matter which of the four dimensions we look into, leaders invest in analytics. They want to understand customer needs, their interaction patterns, they develop claims analytics and use advanced analytics in their overall operations. The world has become too complex to manage it without analytics, and leaders recognize that.
What are you doing to differentiate? Are you a leader or a follower? Let us know in the comments.
If you would like a copy of the full report you can access it here: