Three Approaches to Competing in The Darwinian Economy Mike Fagan, VP Product Management | Aug 30, 2016

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The world of insurance is changing. If you expect to compete, you need to be fast, forward-thinking, and flexible. Gone are the days where you could afford long implementation cycles and waterfall methodologies that require a large commitment of corporate resources all the way through project completion. Simply put, nobody can compete in a digital world with an outdated approach. So how can you transition from old methodologies to new ones?

Today, insurers, software companies and industry leaders are pursuing agile methodologies, focused on short development cycles, rapid hypothesis testing, and a creative approach to traditional problems. In this post, we’ll look at three tactics you can adopt to transform the way you compete in our Darwinian Economy.

Paper Prototyping

When was the last time you sat down and drew out your thoughts? Your project requirements? The old lesson from kindergarten is true, it’s better to draw out your thoughts rather than jumping right into action. After all, it’s much easier – and less expensive – to make a change on paper than it is in software.

Paper prototyping can help save countless billable hours and resources when meeting with clients. By drawing out project requirements and prototyping how a system operates and looks, you can diagnose pain points and areas of miscommunication earlier in projects well before they become problems. At Instec, we ask clients to help us draw what screens look like, what buttons should do, and how the user moves through the system.  A picture is worth a thousand words, and having a visual snapshot of what clients are looking for helps drive requirements, and confirm project paths.

Whether it’s coming up with a commercial auto program for limousine services in Chicago, or a package program targeting a specific class of business like pet shops, paper prototyping is a cost effective way to confirm project requirements, and get feedback on solution usability before wasting resources on a simple miscommunication.

Innovation Lab Approaches

While paper prototyping is a practical approach to planning project requirements, the innovation lab is a practical approach to testing new programs and products. Think of the “Innovation Lab” as a place where you can try out new ideas on a small scale. For example, carriers and MGAs can test out a program’s profitability in a few states to see if it is successful before expanding the program nationwide.

Spinning up programs quickly and testing them in small markets helps program owners make decisions based on potential profitability, before spending a lot of time and resources in their development. These initiatives are treated like “mini-incubators”, and by taking an entrepreneurial approach to their launch, they can be quickly scaled up or shut down.

An innovation lab approach to new programs becomes even more powerful when combined with analytical tools to help identify the most advantageous risks that program owners should pursue. With analytics, you can monitor a program’s success through location-based data, determine what lines and add-ons are popular in a given program, and tweak the program to better mirror what your customers want.

Using a Content Library

Does innovation always come from some never-before-seen product or service? Sometimes, but more often than not, innovative products are created by combining proven elements in a new way. In the insurance market, this typically means creating a new combination of pricing rules, coverage forms and underwriting guidelines to target a specific niche opportunity. It’s an approach we explored in Your Next Good Idea Starts Here.

Having a dedicated content library with quick implementation features is now more crucial than ever in the program space. To build and test new products in an eight- to ten-week window, you can’t afford to start from scratch. We’ve seen many insurers draw heavily from existing bureau content and extensions that already exist for other classes of business, enabling them to begin quoting in as little as six weeks. A library of proven content gives you a head start.

Looking Ahead

The insurance industry is constantly evolving, and competition will only increase as niche markets become more crowded. First-mover advantage will be crucial in the next few years, as industry players seek to stake out and own new battlegrounds.

As fintech spending increases, and agile practices become more widely adopted, carriers, solutions providers and reinsurers alike are racing to find the magic mix of elements that will place them on top. Consider exploring some of the tactics described in this post, and your company may find itself a little closer to that goal.

Mike Fagan has worked in Property and Casualty insurance and automation since 1988, including ten years with Cigna's Special Risk Facilities. Mike joined Instec in 1996 and works closely with Instec’s clients, and has delivered many of Instec’s new software releases, ensuring a smooth transition for clients having the prior release of the software. He received an MBA from the University of Chicago in 1995, specializing in Finance, and received a BS in Information and Decision Sciences from the University of Illinois.