New SMA Blog by Karen Pauli, Principal, Strategy Meets Action —
It is always exciting to see industry results – particularly those that rank insurers by premium size. It is probably the competitive nature that lies within most of us that gets a bit of a thrill out of seeing which insurer is gaining position and which is losing position. In my career, I have taken downright joy out of seeing a major competitor lose ground to the insurer I worked for. High five and fist pump time!
In most instances, when A.M. Best issues their Top 200 U.S. Property/Casualty Writers results, there is some jockeying for position – up or down a position or two. However, the 2018 results issued in July 2019 revealed something that literally flew off the page. One insurer moved up 28 positions, another 29, and a third jumped a staggering 121 positions. While the upward movement is interesting in and of itself, it was who the insurers are that really caught my attention – reinsurers! Swiss Re, Everest Re, and Arch, respective to the numbers above. And they join Munich Re at number 18.
Now, it is easy to rationalize these position changes – mergers and acquisitions. However, it’s what lies beneath that is critical for all insurers to recognize – and changes the market’s competitive landscape in four critical areas:
- Data: Reinsurers have an abundance of data, across numerous categories and geographies. Data is king, and reinsurers have it in spades. This changes the foundation for insights and puts these organizations ahead of the pack because most primary insurers do not have diverse data – at least not yet.
- Information: Data generates information. Reinsurers have information about products, segments, buyers, distributors, channels, loss outcomes – you name it. This allows their decision making to be immediately more robust.
- Skills: There isn’t an insurance executive who does not indicate that lack of skills is a major issue for their organization. Because of the nature of the reinsurers’ business, they have had skills, particularly data and analytics skills, embedded in their organizations for a long time. This puts them down the road in terms of leveraging the explosion of data and information – and utilizing cutting edge technology to do so.
- Money: Reinsurers have a good deal of money. For a number of years, catastrophe outcomes have not drained coffers, and capital remains abundant. This allows reinsurers to invest in their subsidiaries. And they are doing so, which impacts primary insurers directly.
So, the message is not “lock the front door, turn off the lights, and send everyone home because the reinsurers are coming.” The message is that “the competitors of yesterday may not be the competitors of tomorrow.” There are competitors who are uniquely focused on changing business decisions and how those decisions are made. There are competitors whose DNA is innovation and transformation, and no one can run from that. The bottom-line message is urgency. If your organization believes it has many years before innovation and transformation will impact your operating environment and market position, or that innovation and transformation can be a secondary focus for your organization, consider that there may be a reinsurer just around the corner who has another idea.
About The Author
Karen Pauli, Principal at SMA, has comprehensive knowledge about how technology can drive improved results, innovation, and transformation within insurance operations. Karen has worked extensively with insurers and technology providers to reimagine processes and procedures to change business outcomes and support evolving business models. Her areas of focus include underwriting, claims, business intelligence and analytics, data sources, agency distribution, and customer management. Karen’s real-world experience with digital transformation projects has given her unique insight into the changing customer and distributor experience in the digital age. In her more than 30 years at insurance companies, and in the technology research and advisory space, Karen has developed her talent for aligning business goals and perspectives with technology roadmaps to create competitive advantage.
Exclusively serving the insurance industry, Strategy Meets Action (SMA) is an advisory services firm offering retainers, research, consulting, events, and innovation offerings to both insurance companies and solution providers. Learn more about SMA at www.strategymeetsaction.com.
SOURCE: Strategy Meets Action (SMA)