Solution Partner Views
You Can’t Hide from Disruption in Insurance
You can`t hide any longer—disruption in the insurance has become the new normal. Just a few years ago, we were still enjoying a nice stable industry, but now we`re undergoing arguably the most dramatic changes the industry has ever experienced. What makes this time in our industry`s history different than past change?
New technologies, non-traditional players, and, in many cases, radically different buyer perspectives on how insurance is bought, distributed and serviced are forcing insurers to take a fresh look at every aspect of the operation—and to take that look sooner rather than later. In the near future it will no longer be possible for insurers to continue the business status quo.
Unlike in the past, the degree and speed of change today will not be incremental or transitional. The 1960s ushered in the movement from manual to computer-based policy writing and assembly. Since then, we`ve continued to adopt new technologies to further automation. While the effort made processing of policies more efficient and saved tremendous amounts of time and money, the process itself remained fundamentally unchanged.
Today, insurers don`t have the luxury of just changing technologies or nibbling around the edges of processes. In order to remain competitive and even viable, insurers need to embrace revolutionary changes. It`s not ‘just` your father`s insurance industry any more. The old rules of engagement are being challenged by Millennials, while Boomers and Gen Xers expect their different preferences for insurance purchase and service continue to be met. One size no longer fits all.
Serving as an example of what we`re up against, I`ll share an incident from the Insurance Disrupted 2015 conference, one of the Emerging Technology Conference series at the Silicon Valley Innovation Center. One panelist commented that as a Millennial he didn`t want to have to fill out a form when buying insurance online. He wanted to sign for the policy with his “digital presence.” How I`d like to be a fly on the wall when that topic is discussed between insurers and regulators. I`m not saying it won`t happen at some point in the future—perhaps relatively soon—but I suspect regulators won`t readily embrace the concept.
It seems everyone acknowledges that change is needed and unavoidable. However, while research has shown that the majority of insurance C-level executives plan to develop digital strategies in the next year, those studies also show insurers continue to be slow to adopt change. The resistance to change may be due in part to corporate culture. However facing change across the entire enterprise is a daunting task that can seem insurmountable. Rather than trying to eat the whole ‘change elephant,` I encourage insurers to start off small and take it one bite at a time.
So, where does an insurer begin to tackle this conundrum?
Many insurers are taking the first bite with new core systems; replacing old commercial systems or even older home-grown systems. But will new core systems have an immediate effect on how they engage with policyholders? It may seem far-fetched, but I would argue that making changes first in the policyholder engagement process is more critical to an insurer`s future than updating core systems.
If insurers are going to consider changing almost every aspect of the operation and process in some way, what better place to start than at the beginning of the process—the initial engagement with the prospective customer? And that leads us back to what always has been and always will be a necessity of doing business—forms and documents. They may come in different formats than the traditional paper-based forms of the past, but at their heart they are still forms and documents. What needs consideration is how to bridge the gap between the current form/document environment and how it affects the new challenges of policyholder engagement.
A common concern expressed at recent conferences, in ‘expert` reports and on insurance industry websites is the question, “How do we effectively interact with Millennials?”
Millennials don`t do things the way their parents and grandparents have done in the past. They don`t live or view the world the same way, and they certainly don`t shop for and purchase things (including insurance) the same way.
We want to engage with Millennials in ways they find acceptable while maintaining the channels we have open to Boomers and Generation Xers. Rather than building silos for each generation, we need to revisit the initial engagement process, which means revisiting forms and documents, as old school and mundane as that sounds.
Yes, I`m suggesting going back to the basics by asking insurers to make managing forms and documents a priority—including template design, data, content and delivery options (print, web, mobile, etc.). The 2016 way of saying it may be to create the ideal customer experience, but in reality we`re still talking about the design, use, maintenance, delivery, and tracking of forms and documents, as well as the information they contain.
To some degree making the management of forms and documents a priority is going to take a leap of faith, a lot of internal selling, and the courage to take on the old corporate culture. I realize this is all easier said than done, but it may become necessary for an insurer to step outside their comfort zone to survive in the new market. Decisions will need to be made just because they make business sense, even though presenting a solid ROI case may not be possible. Sometimes, investment in quality, simplicity, speed and flexibility will trump the traditional measurements of cost savings or revenue generation.
Insurers have two choices: Take the leap of faith and implement change earlier than competitors to establish competitive advantage or; wait until the pain is so great that they are forced to do something. The best one can hope for when choosing the latter, is adopting change is better late than never in order to just survive.