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Means, Motivation and Money Will Keep Carriers Ahead of the Pack

Robert Regis Hyle | August 19, 2014

One of the things I looked forward to when we began the ITA Pro magazine and website was to keep asking one simple question: What is going to be different about the insurance industry over the next few years? We try to do that with each article that is written because, as an industry, we’ve been focused too long on the mistakes of the past and the need to play catch up.

Carriers need to catch up, of course, if they are ever going to get ahead of the curve, but the ability to catch up, in itself, implies what we all know has been one of the insurance industry’s biggest flaws: Carriers lag behind the rest of the financial services industry.

There is nothing wrong with being what some call a “fast follower.” Only a few insurance companies have the three M’s that are needed to be true leaders in technology: means, motivation, and money. The rest of the industry has to rely on those leaders or a strong technology provider industry to ensure they are at least in reach of their competition, if not ahead of them.

But no matter what the R&D budgets are, insurance IT leaders can’t afford to take their eye off what is likely to happen beyond the horizon. I recently asked some experts what they see happening in the distribution channel over the next five years and, to no one’s surprise, the answers will cause some grave concern.

Anyone paying attention knows the market for agencies has been shrinking, not just from the direct writers, but from the web presence of many carriers. Insurance buyers will always need trusted advisors, but that doesn’t mean it will be the guy sitting behind a desk in some strip mall.

M&A activity will also be heating up because MGAs know that organic growth will be difficult to achieve in a changing atmosphere and the key to automation, often, depends on the size of the agency.

Those lessons aren’t just for agencies, though. Those same comments can be made about many small and midtier insurance carriers. The future of their business will not look anything like it looked a decade ago. If the way you do business closely resembles what you were doing in 2004, you are unlikely to be a fast follower and you surely are not a leader.

 


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The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.

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