- Where Insurance & Technology Meet

Waiting for Disruption

An analyst and thought leader recently went public with a post suggesting that disruption is over-hyped and underwhelming from a practical standpoint. I respect the author and the analysis, but I think that we are in uncharted territory, and when looking at disruptive competitors, we might consider Hunter Thompson’s advice.

Who is the analyst and what does he say?

Barry Rabkin, founder and president of Market Insight Group, is a highly respected writer and speaker on issues in the P&C industry. Barry recently posted a short piece with a long title on LinkedIn: “Insurers should ignore the wolf pack advocating ‘disruptive change’ (whatever that means).

Barry starts by saying that he has “a very hard time understanding what ‘disruption’ is specifically from the perspective of insurance and the insurance industry.”

He believes that the concept is driven by “VCs, entrepreneurs, software firms, telco firms, system integrators, consultants, and industry conference producers” who “have grabbed onto (disruption) like a wolf pack savagely tearing apart, swallowing and gnawing the spoils of their most recent kill because it represents a new source of revenue for them.”


As an industry conference producer, I feel it necessary to quote Curly Howard, who said, in a similar situation, “I resemble that remark.”

However, it seems that Barry is less concerned by the wolf pack’s avarice than the naiveté of insurer(s) who believe that disruption (in and of itself) is a real risk. Listening to and obeying the clarion call of ‘doom and gloom’ from the wolves, is, according to Barry, “a recipe for true disaster for the insurer caving into these irresponsible voices.”

Barry explains that the core problem with disruption is that “No one person or company can truthfully state they are ‘disrupting’ the insurance industry unless they have years of post-implementation facts.”

This is probably true.

But some things can’t wait, even if they have to…

The current situation may not tolerate a multiple year delay. The logic for waiting for complete data strikes me as similar to waiting until after death to get a formal diagnosis of chronic traumatic encephalopathy (CTE) in a football player who suffered multiple concussions.

Can we challenge the orthodoxies now?

Writing in PropertyCasualty360, Sam Friedman, insurance research leader with Deloitte’s Center for Financial Services in New York, argues, “insurers cannot afford to wait on the sidelines as disruptive trends in technology, the economy, and society threaten to negate the orthodoxies under which the industry has operated.”

These ‘orthodoxies’ are widely held beliefs, according to Friedman, and include:

  • Consumer familiarity and comfort levels with established insurers precludes wide-scale disruption by newcomers
  • The complexity of insurance is gives the industry’s agents/brokers a considerable edge over alternative distribution challengers.
  • Insurers have effectively cornered the market on the data, models, and analytical talent.
  • Since risk pooling is fundamental to the business of insurance, new players cannot easily replicate the carriers’ massive capital reserves.

According to Friedman, these orthodoxies are being rendered moot by:

  • Enhanced connectivity creating new data sources
  • Evolving risk transfer options
  • Emerging financial technology
  • New business models

Meanwhile, in the real world….

At the 2016 Executive Forum, we had numerous examples of insurers (established and emerging) taking calculated leaps into new and, dare I say, ‘disruptive’ technologies and processes.

So, how do we know if these are viable? Our keynote presenter, Joe Cooper addressed this. He said insurers needed to focus on three areas:

  • Customer Experience
  • Employee Experience
  • Enabling Technologies

And summarized four principals:

  • Business Units need to define and deliver the Customer Experience
  • HR & Technology define and deliver the Employee Experience
  • CIOs must enable digital strategies while pursing operational efficiencies
  • The enterprise must innovate quickly by testing and learning

The last principal provides the flexibility to respond in a timely fashion.

So, what would Dr. Thompson recommend …

As insurance professionals, we have to analyze risk as to impact and timing. If we are uncertain about the timing of disruption, but believe the impact could be existential, we should consider Dr. Hunter S. Thompson’s exhortation: “There is no such thing as paranoia. Your worst fears can come true at any moment.”

What do you think?


One Comment

Barry Rabkin

I do realize from the comments that my post received that some folks miss my point which I probably didn’t communicate as clearly as I had wanted: obviously insurers should consider changing / evolving but the pace and manner in which they do change should be entirely up to them (and their actions/reactions to the needs/expectations of their current and target clients) …. and that insurance firms should not be swayed by technology firms, VCs, or others who generate their own revenue from selling their solutions to insurance firms.

I distinctly remember when I worked at AEtna Life & Casualty our managers telling those of us on committees to choose technology firms to potentially purchase products/solutions that it was AEtna’s money and we should nail the vendors’ balls to the walls….. I want to do what little I can to suggest to insurance firms that they use the same philosophy.

I’ll also add when Dale Kutnick hired me to launch and lead the strategic insurance advisory service at The Meta Group he consistently told us that: “If technology firms tell you you’re being too rough on them, remind them if they want a friend to buy a dog!”


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