We are experiencing a blizzard of technologies and processes aimed squarely at changing the insurance industry. Early implementations show that there are opportunities to improve the business of insurance, but some of the edges are fuzzy. The new technologies rely on a new business model that can be a bit threatening.
So, What’s New ….
In the introduction to his ‘What’s Hot in 2017” Technology” report, Futurist David Smith notes that the rate of ‘breakthrough’ digital technologies, which began in 2015, is expected to continue apace and will “start to impact the operating environment in which businesses find themselves.”
That said, Smith cautions that there is a risk that there are risks as well as rewards:
The raft of new technologies represents new ways of doing things yet the risk remains that many will simply attempt to overlay digital on old processes and systems. This danger, and the friction that can result from dynamic technology grafted onto static models will result in disruption and challenges. The opportunities that can flow from them meanwhile will continue to shape ecosystems and industries and the winners within.
In other words, success requires business acumen as well as InsurTech proficinecy.
But this isn’t your daddy’s business model…
In the good old days … say 2012 … if an organization faced a new, large opportunity that fell outside the operating plan, the executive team would review the strategic 5 year plan, determine whether the proposition fit the direction, conduct some analyses, and, if all was well, put it on a futures list for the annual plan and budget review.
With the democratization of technology, data and a new customer-centric model, the five-year plan is something that needs to be replaced. How about a five-year commitment, instead? A commitment to move forward, to be open to new ideas and offerings, and to be willing to be wrong early in the process, so that as mistakes are made, lessons are learned and the failures become valuable.
If this sounds like Agile….
This operates with the agile methodology, but with a critical twist. The organizations – especially larger organizations – must learn to run multiple agile initiatives to compete with smaller, niche competitors. This involves setting up a repeatable process, with the same success criteria such as: what documentation is required, how decisions are made, and when funding is applied.
To keep multiple projects under control, Haney advises a well-prepared ‘Innovation Council’:
A properly prepared and engaged innovation council is the linchpin of corporate innovation. Its members are the guardians of the innovation process and align all innovation activities, including those from the outpost, with the company’s best interests.
Will this calm the blizzard?
The short answer is ‘No.’ There are three things to remember:
First, the insurance community is facing some new experiences (direct customer transactions, multi-channel contact points) and some new product twists (on-demand coverage). Folding these into a new business model will take time.
Second, a principle of agile is to ‘Fail Fast.’ Haney points out that for large companies, “we must remind them that they will be wrong more than they will be right.” While I don’t have empirical data, I sense this is not well understood by the majority of insurance professionals.
Third, we are still scratching the surface of a couple of innovations that will take time to absorb. We will be spending a lot of time looking at products and approaches to be aligned with the Internet of Things and Artificial intelligence.
And we don’t know the next innovation that we haven’t dreamed of as yet.
The good news (with a bit of self promotion) is…
The more we each learn, the more we all will know. Especially if we can share at events such as the 2017 Insurance-Canada Technology Conference and Broker Forum, 28 February and 1 March 2017 at the All Stream Centre in Toronto.