The once-staid insurance market is changing. New entrants and incumbents alike are accelerating the pace of innovation, and raising the level of competition. In this Darwinian Economy, insurers must move quickly, or risk being left behind.
Automation is critical in this fast-moving market, yet even some recently-modernized core systems aren’t fast or flexible enough to keep pace. This shortcoming has moved many insurers to deploy more nimble systems that can support the rapid launch of innovative new products or programs. Rather than replacing enterprise systems, these “strategic systems” sit alongside, serving as an innovation launchpad.
In 2016, market disruption became front page news in the insurance industry. Stories abounded about new business models, shifts in the value chain, and the digitization of insurance – all aimed at securing new revenue sources by getting closer to the customer. Some of the change came from new entrants to the market, and some from forward-thinking incumbents who recognized the early signs of disruption and acted pre-emptively.
Much of the disruption has been in response to customer expectations that have been shaped by web- and mobile-enabled experiences in other industries. Insureds, especially the millennial generation, are looking for a digital experience for the entire insurance life cycle, from quote to claim. An online quote alone is no longer sufficient.
Agents, too, have expanding expectations. In prior years, it was sufficient to offer online quoting. Today, it is not uncommon for agents and brokers to demand the ability to conduct all transactions on the web - including renewals. As with insureds, this is a direct result of experiences with Amazon, Facebook, and others where full-service web applications are the norm.
In light of shifting market demands, it is not uncommon to hear a carrier or MGA proclaim their vision to become a ‘digital insurer’, only to find themselves hamstrung by inflated modernization projects with extended timelines, and system architectures that didn’t contemplate the needs of today’s market. In an era where capital is plentiful, new entrants, unburdened by past system decisions, are simply moving in to fill the gap.
The online experience is any easy target for market newcomers, since it requires little knowledge of the intricacies of insurance. In the long term, these innovations will be easily replicated. Many incumbents, on the other hand, are looking to product innovation as a more differentiated and defensible way to drive growth. In navigating the complexities of insurance, these companies with deep industry experience have an advantage over tech-centric upstarts.
For those insurers seeking to innovate through products, a flexible system with rapid time to value is essential. Unfortunately, many are finding that their legacy systems, and even the modern software they purchased under the guise of transformative and enterprise-wide improvement, aren’t flexible or agile enough to launch new products before the opportunity disappears. These companies now realize a “one size fits all” approach to legacy replacement and system consolidation may have gone too far.
Some insurers are finding success by incorporating a flexible, agile platform into their mix, adjacent to their enterprise systems. These strategic systems can handle the pace required to move a new product or program from concept to launch before a competitor closes in. They include three key attributes that can take an insurer from implementation to first quote in a matter of weeks:
If you have a backlog of new products or programs just waiting for a system that can handle them, or if you’ve been passing up new business because you haven’t got a system that can support it, consider adding a strategic system into your mix, and join the market innovators.
Rob Reed began his career in the insurance industry in 1997. Starting as an Underwriter Trainee at Prudential, Rob went on to become an agency interface specialist at CGU Insurance Limited and OneBeacon Insurance companies. With his deep domain expertise, Rob joined Instec as a Sales Executive in 2001, and has since helped dozens of insurers solve challenging operational issues with tailored solutions. As Vice President of Sales, Rob serves as a key partner, guiding prospective clients through the sales engagement and initial implementation processes.