Filed Under:Agent Broker, Next-Gen Initiatives

The insurance iceberg: Transformation going on under the surface

There may be choppy waters under the visible tip of the iceberg, but current activity is very focused and taking individual insurance companies and the industry as a whole in a new direction. (Image: iStock)
There may be choppy waters under the visible tip of the iceberg, but current activity is very focused and taking individual insurance companies and the industry as a whole in a new direction. (Image: iStock)

Take a look at the financials of the insurance industry and industry projections, and it may seem like business as usual. But peek just under the surface at many insurers and you’ll find a great deal of activity aimed at transformation — positioning for success in the rapidly changing digital world. Typically, this activity takes the form of strategic initiatives — major enterprise-wide programs that require sustained commitment and investment. SMA has just released a new research report identifying these strategic initiatives, “Insurers’ 2016 Strategic Initiatives: Advancing Industry Transformation.” The report covers the priorities of these initiatives, sources of funding, and their role in helping insurers attain the future as a Next-Gen Insurer.

SMA research reveals that the top strategic initiatives remain virtually the same as 2015 — customer experience, analytics, new products, and core replacement. This is an indication that the commitment to transformation aligned with these four initiatives is rock solid. However, the manner in which these initiatives are being funded is changing — with more funding coming from new sources outside the IT budget. In 2015, about a third of the funding for strategic initiatives came exclusively from capital investments. In 2016, funding from new sources will increase to over 40%.  

Entering a new digital era

These are the questions to explore — Why change? Why all the investment and resources devoted to rethinking and reshaping the company? The answers are straightforward — many recognize that we are entering a new digital era, with technology rapidly advancing and in the hands of customers and competitors. Emerging trends such as the sharing economy, along with the rapid adoption of technologies such as cloud and mobile are creating new opportunities (and risks) for insurers. In fact, SMA predicts that the introduction of new products, business models, and business optimization will accelerate as insurers leverage maturing technologies and capitalize on emerging technologies such as wearables, the "Internet of Things," drones, and others. Technology really is driving a lot of the conversation and action at senior levels these days.

Ultimately, many insurers have a vision of building a company that is agile and able to respond rapidly to market opportunities and threats. The common threads running through the strategic initiatives are the need to be digital and the key role of innovation. Although not the end games in and of themselves, digital and innovation are the enablers that form the foundation for future success. SMA has created the Next-Gen Insurer Model to describe what the future insurance company and what future success will look like. The twelve initiatives that many insurers are pursuing are the mechanisms that insurers are using to become Next-Gen Insurers. There may be choppy waters under the visible tip of the iceberg, but the activity is very focused and taking individual companies and the industry as a whole in a new direction. In the not too distant future — within five years by our estimate — the visible part of that iceberg will change as well, and a new industry will emerge.

For more information on the insurers’ strategic initiatives and the industry transformation underway, contact Deb Smallwood at dsmallwood@strategymeetsaction.com

Editor's note: This article first appeared on StrategyMeetsAction.com and is reprinted here with their permission. Click here for the original post.

You’re invited to join us on Facebook!

Related

Here are 5 insurance tech trends you'll see this year

Building on core system modernization efforts from last year, the P&C industry will continue to make technology progress in 2016.

Featured Video

Most Recent Videos

Video Library ››

Top Story

Top 20 most costly terrorist acts by insured property losses

Companies and insurance clients may be questioning whether they are adequately insured for business interruption and other property losses.

Top Story

Future is bright for renewable energy market

A buyers’ market for coverage and strong growth in renewable energy, particularly in solar and wind power, provides opportunity for agents and brokers looking to grow their book.

More Resources

Comments

eNewsletter Sign Up

Agent & Broker Insider eNewsletter

Proven success tips and essential information to help agents and brokers grow their practice – FREE. Sign Up Now!

Mobile Phone

Advertisement. Closing in 15 seconds.