Convergence is emerging as the key theme for 2017.
As insurers continue major initiatives, launch new ones, and respond to the external forces acting on the industry, the strategies are increasingly overlapping and becoming mutually dependent.
On one hand, traditional challenges and related strategies are not going away. Insurers have a business to run every day — the management of their products in the market, customers requiring service, and regulators and shareholders/members monitoring progress. On the other hand, the digital, connected world is full of new opportunities, but at the same time, gives rise to some new and credible threats.
Pace of change
The insurance industry is in the throes of transformation, with almost half of North American insurers stating that their companies are in transformation mode. At the same time, many are realizing that the pace of change within their companies is not matching the pace outside their company.
Customer expectations, the digital world, emerging technologies, and the disruption of other industries are putting more pressure on insurers to rethink and reposition their businesses. Interestingly, customer expectations have now been elevated to the point of becoming the number one driver of technology investments.
One of the key findings of our recent research on strategic initiatives for 2017, is that digital is gaining more momentum than any of the 16 initiatives we have been tracking. Strategies to become a digital insurer have now reached a high penetration in the industry, with 72 percebt of insurers now claiming that they have this initiative underway.
Initiatives don't occur in isolation
Another set of findings is that traditional initiatives, such as enterprise data/analytics and customer experience continue to be highly important, while new initiatives such as InsurTech investments, digital distribution ventures, and greenfield insurers are starting to pick up. These initiatives don't occur in isolation. In fact, there are significant dependencies among the initiatives. Thus, the reshaping of the industry is more likely to be the result of blending the best of the old with the best of the new. This is the notion of convergence.
While tackling 16 major enterprise initiatives seems daunting for an individual company, each insurer will identify a subset that will be most important for them. Almost all the initiatives will have some role, but the priorities will differ based on current market position, business strategy, resources, and funding.
Bridges to the future
One way to prepare for the future is to create plans to address foundational capabilities. Strategy Meets Action (SMA) has defined 7 bridges to the future, or initiatives that represent pathways upon which insurers can build transformation strategies critical to becoming a next-gen insurer, such as "go digital," "major in data and analytics," and "operationalize customer experience." More information on these 7 bridges can be found in SMA’s research report, "Insurance in Transformation: Building 7 Bridges to the Future."
For insights on insurer plans and strategies for the 16 strategic initiatives, see the recently released report, "Insurers’ 2017 Strategic Initiatives: The Convergence of Traditional and New Initiatives."
Mark Breading is partner at Boston-based SMA. Email him at email@example.com. This article first appeared on StrategyMeetsAction.com and is reprinted here with their permission. Opinions expressed in this article are the author's own.