In March 2016, the first "Future Trends: A Seismic ShiftUnderway" report was published, highlighting that apowerful, disruptive seismic shift in the insurance industry wasunderway due to the converging "tectonic plates" of people,technology and market boundary changes.

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The shift was realigning fundamental elements of business thatwould require major adjustments from insurers in order for them tosurvive and thrive.

Game-changing events, rapid advancement

By the end of 2016, we could make a case that it was not only apivotal and groundbreaking year, but it was historic. At no time inthe history of insurance can we find one year that includes thismany game-changing events and a rapidpace of ongoing advancement. A new trend at the forefront of theshift that gained considerable momentum in 2016 was InsurTech. Theemergence of InsurTech represented an industryhigh point for activity, excitement and concern on the promise andpotential of insurance disruption and reinvention.

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Commonly, large shifts of this magnitude are punctuated withpauses. For example, with the rise of the internet for business usein the 1990s, or the flurry of IT activity leading up to Y2K,monumental changes were followed by periods where insurers couldbreathe, adjust and move forward. What became apparent in 2016 isthat InsurTech advancements and the forces of change may not seeany significant slowdown. The momentum that has been building isunstoppable. Industry advancements, cultural trends and ITreactions are gaining speed as they gain strength and a frameworkfor stability.

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Because insurance industry shifts are in constant flux,decisions based upon those shifts must be based on the very latestperceptions. To help, Majesco has issued a the "Future Trends 2017" report with a fresh set ofperspectives and data that will keep insurers abreast of the latesttrends. Throughout the report, Majesco also helps insurers considerpractical measures for preparation.

The forces of change

The Future Trends reports provide context to a shifting industryby placing trends under three umbrella forces/categories: People, market boundaries andtechnology. Under each category, major developments are discussedand industry impacts are noted. For the 2017 report, Majesco hasexpanded the subtopics to include:

  • Impacts of economic conditions.
  • Behavioral economics.
  • Pay-as-you-need insurance enterprises.
  • Platform solutions.
  • InsurTech.
  • Competition for talent.

The unstoppable shifts become clearer and more relevant whenlooked at through the spheres of change.

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People. A changing population, withmany members beset by economic challenges, is applying urgentpressure upon the insurance industry to develop a new approach tothe market; one that demands products and services that are moreaffordable, tailored to very specific needs, simpler and groundedin trust. These conditions have helped create a "new normal" whenit comes to consumers' and businesses' risk profiles andexpectations. The atmosphere for purchasing decisions is alsochanging. Insurers need to take a close look at what factors willimprove policy uptake in a world dominated by the desire forimmediacy.

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Related: Be an agent of change

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Market boundaries. Customerexpectations, experiences, loyalties, and relationships arecontinuing to rapidly change with long-held business assumptionsand models being dismantled and replaced with new models, moreappropriately aligned to this shift. The traditional boundariesbetween industries and companies are also being dismantled bytechnologies that have created platform-based economic shifts. Theresult is a porous market, where engagement is everything and therelationships between businesses, customers, channels and partnerscreate their own chemistry. It is exciting! But it also means thatnew strategies are needed for everything from product developmentto back-end administration.

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Technology. The rate of emergingtechnologies will continue, but even more exciting is the rapidadoption and commercialization of these technologies, surpassingmany predictions by "the experts," while catching many traditionalexecutives off guard. It comes at a time when the convergence ofadvancing technologies, increasing customer expectations anddemands, and access to capital for new technology start-ups aremagnifying the extremes — from disruption and destructionto innovation and transformation. Can insurers simply graft thesenew technologies onto their existing frameworks? It is unlikely. Abroader approach is needed.

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Even insurers focused on replacing their legacy core systems with modernsolutions surrounded by digital and data capabilities will needto take a new view and a broader approach to the changes aroundthem to make certain that systems stay aligned with new customerexpectations. These expectations highlight a generational gap wheretraditional insurance business models, processes, channels andproducts are becoming rapidly irrelevant to a new generation ofbuyers.

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Will established insurers suffer at the hands of tech-savvy,culture-savvy competition? Some may, but only if they allowthemselves to. Many will re-invent themselves to become the newleaders of a re-imagined insurance business . . . that meets theneeds and demands of a new generation of buyers. They will forgenew roads of adaptation and become adept at shifting balance fromthe traditional old business to the ever-flexible new business.

Adapting to the shift

This seismic shift is creating leaps in innovation anddisruption, challenging the traditional business assumptions,operations, processes and products of the last 30-50 years. Theimplications for insurers are enormous. To adapt to this shift, thereport notes that insurers are charting a path using the followingmethods:

  • Maintain and grow the existing business while transformingand building the new business. The current business is fundingthe future and needs to be kept running efficiently and effectivelyas the market shifts.
  • Optimize the existing business while building the newbusiness. Optimizing any process will help to maximize theexisting business, reduce the cost of doing business, and provide abridge from the past to the future while allowing realignment ofresources and investment to the new business.
  • Develop a new business model for a new generation ofbuyers. Create a strategy and plan for a new businessmodel that supports simultaneous leaps forward to create newcustomer engagement experiences underpinned by innovative productsand services that offer growth, competitive differentiation andsuccess in a fast-changing market dynamic.

These three focal points are critical steps in a world of change and disruption. A newgeneration of insurance buyers with new needs and expectationscreate both a challenge and an opportunity. There is no clear pathor destination.

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The time for plans, preparation, and execution is now —recognizing that the customer is in control. Those who recognizeand rapidly respond to this shift will thrive in an increasinglycompetitive industry to become the new leaders of a re-imaginedinsurance business that aligns to a rapidly growing, Millennial,Gen Z and Gen X customer base.

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Related: The direction of insurance in 2017: It's all aboutconvergence

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Denise Garth is senior vice president ofstrategic marketing responsible for Morristown, NewJersey-based Majesco, aninsurance industry software and service company. She can be reachedat [email protected], onTwitter @denisegarth or on LinkedInOpinions expressed inthis article are her own. Thisarticle first appeared on the Majesco website and isreprinted here withpermission.

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