InsurTech is the hot topic of the day. And start-up organizations are demonstrating the value of InsurTech to disrupt antiquated processes and products. However, this does not mean that we derail the existing corporate infrastructure and rely exclusively on new technology. So what do we need? Convergence might be in order.
A week ago, I attended the 10th Annual SMA Summit in Boston. I have always enjoyed getting away to listen to smart analysts provide context and projections regarding the use of technology in insurance. As a bonus, this year’s SMA Summit brought clarity for me between InsurTech and other business / technology mandates.
It’s the Convergence, stupid…
The critical connection was captured in the theme for the event: “Convergence”. Deb Smallwood, SMA Founder, opened the day with a a crisp definition: “Traditional Strengths with New World Strategies”. She detailed five fundamentals for the next 5 years:
- Innovation is mandatory
- Agents (Brokers) will remain vital, but the policy holder is the customer
- Core capabilities will remain foundational
- AdvancedAnalytics and AI are the DNA
- Digital is our reality
What do the practitioners and suppliers say?
The individual sessions – conducted by the SMA Analysts and SMA clients – focused on key elements of technology and business, emphasizing that success is not based on any one strategy or technology, but the confluence of purposeful actions.
For example, Chris Moss, Solaria Lab Manager at Liberty Mutual Insurance, spoke on the topic of “Innovation in Action”, providing a clear picture of the role and function of the Lab.
Moss noted that Innovation requires a framework to focus efforts. In his case, the main elements are:
- A Balanced Portfolio which included Core Business (e.g., providing machine learning to underwriters), Adjacent actions (e.g., new distribution), and New actions (e.g., non-traditional revenue streams).
- Domains, such as the sharing economy, connected life with IoT devices, and disruptive insurance, e.g,, micro-insurance.
- Execution Frameworks – in-house and partners
- Investments – buy vs build
There were a number of case studies which paired the traditional with the innovative to achieve bespoke solutions. Girish Rao, AVP-IT, Zurich NA described his “view through a new lens”. This included digital convergence which facilitates the use of emerging technologies (robotics, cognitive computing, etc.) to support Zurich’s core processes in new ways (self driving cars/trucks).
Large organizations – such as Allstate – are creating external organizations – Arity, in Allstate’s case – to introduce new products based on the core business functions. Chetan Phadnis, Arity’s VP of Product Development, discussed competencies that included data and computing. The challenges are blending historical data with realtime information. While challenging, Phadnis emphasized that these provide important insights to help with transformations of mobility (e.g., autonomous vehicles).
And this is where does Convergence comes in …
There were many more sessions with clients, suppliers, and SMA staff that brought more information and insights. However, from my perspective, the last elements brought it all together.
SMA’s Mark Breading and Karen Furtado conducted “Winning with Convergence” by defining the Next Generation Insurer. The analysts made the assumptions that:
- the insurance customer is changing,
- there are more products and services coming to market,
- business models are changing,
- and technology / data are integral parts of the enterprise.
On this basis, business context must include convergence of the new with the existing components. The convergence enablers will include new functions, based on a digital platform, and data analytics which can support all channels.
Breading and Furtado are working with industry suppliers to develop this ‘Modern Core’.
Deb’s reprise, and a toast to the future ….
Smallwood closed the day with a call to action.
Convergence assumes that digital transformation will be completed and will demand continuous innovation. From that we will have to:
- Rethink – by experimenting, investigating, and monitoring
- Retool – to have flexible support with partnering and internal recruitment, and
- Reimagine – to constantly bridge to the future.
The close of the Summit was interesting as it marked SMA’s 10th anniversary. It seemed to me that the convergence that SMA articulates to its clients is also being addressed to its internal staff. It is daunting, but doable… and required for the insurance industry, SMA, and us all.
What do you think of convergence in your organization?