Understanding potential impact and lessons from disruptive players and technologies is key to insurers’ strategies, Novarica report suggests
Boston, MA (Sept. 26, 2016) – The pace of technological change makes it a daunting task for insurers, many of whom are still managing legacy systems, to understand which emerging technologies represent a true disruptive threat to their business model. Research and strategic advisory firm Novarica reviews 13 categories of disruption to help insurer CIOs understand the marketplace and make conscious, informed decisions in its most recent report, Understanding Insurance Disrupters.
“Insurers that don’t adopt emerging technologies are going to face declines as their agents and customers become intolerant of their poor capabilities and competitors improve their risk analysis and cost bases,” said Jeff Goldberg, Vice President of Research and Consulting and lead author of the report. “That being said, most disruption isn’t going to signal the end of the current industry model. Investing in disruptive technologies isn’t for everyone, and for the most part, the old and the new can coexist. The goal for all insurers should be to understand new challenges and make strategic choices rather than let the market choose for them, and that’s exactly where this report is designed to help.”
Key Findings of the report include:
- Product and Risk Disrupters like Telematics and Microinsurance mean new and expanded offerings to the marketplace, but this does not necessarily replace existing lines. Insurers should make sure they think of their products in terms of what can be, not what was.
- Cost Basis Disrupters like Drones and Big Data streamline processes and lower costs; in some cases they will adjust the long term loss profiles. Insurers should make sure they understand how competitors will use these cost advantages to underprice them.
- Distribution Disrupters like Online Direct and Blockchain change how insurers sell; many approaches will thrive in an omni-channel world. Insurers should make sure they observe how customers actually want to buy, and not just what their current distributers prefer.
Novarica helps more than 80 insurers make better decisions about technology projects and strategy through retained advisory services, published research, and strategy consulting. Its clients include more than 80 property/casualty and life/annuity insurers. Its knowledge base covers trends, benchmarks, best practices, case studies, and vendor solutions. Leveraging the expertise of its senior team and of nearly 400 CIO Research Council members, Novarica provides clients with the ability to make faster, better, more informed decisions. Its consulting services focus on vendor selection, custom benchmarking, project checkpoints, and IT strategy. More information at www.novarica.com.