Modernization Investments Propel Insurance Industry Forward
Deb Smallwood | November 17, 2014
2014 was not the norm for our traditionally “steady and slow” industry. Transformation and wise technology investments continue to be significant in our industry. Moreover, the positive impact to the business and resulting competitive differentiation will become increasingly apparent in 2015 and beyond.
We are now seeing these investments pay off in major ways—better service, increased efficiency and accuracy, improved insight for effectively managing the business and operations, and more importantly positioning for change.
So what is the impetus behind this momentum and progress? SMA observes that there are three primary factors behind the stimulus, all working in concert to propel the industry forward as a whole and to create unique advantages for individual insurance companies.
First, the digital shift is forcing change. The world around us is changing dramatically. Customers are elevating expectations. External influence is playing an increasingly powerful role in shaping our industry’s future. Many insurers are actively exploring, researching, and running proof-of-concept projects around proven and promising technologies, watching other industries, and capitalizing on their experience.
Second, tremendous investment and effort has been made to modernize and optimize core systems and to deploy flexible and scalable business and technology environments. We are nearing a tipping point with about 25 percent of insurers well along the path of their modernization journey and now using platforms that are much more agile than ever before.
This modernized environment enables insurance companies to do amazing things to optimize their businesses. They can quickly capitalize on new and emerging technologies. A plug-and-play architecture is giving these insurers the ability to rapidly deploy new products, create new customer experience, and to capitalize on the advantages while the opportunity is ripe.
Lastly, but certainly not diminished in importance, insurers are actively taking steps to create a culture for innovation. They are stepping up to the challenges and creating new opportunities. They are aggressively working to rethink and reinvent the business—viewing opportunities from the inside and outside of the industry with a new creative lens, opening the doors to the digital world, and embracing customers and partners that live and work in new ways.
Looking ahead to the next few years, SMA envisions that 2015 will indeed be the year where modernized core systems and technology platforms enable differentiation in the marketplace. We will see more insurers concentrate priorities around becoming Next-Gen Insurers and equipping their organizations to reap the benefits of tomorrow’s opportunities in our new digital world.
Insurers will continue their focus on the customer, transitioning from internally focused operations to deliver nimble and personalized contextual customer experiences. There will be ongoing investment in the capabilities that support bringing new products to market quickly, including customized and bundled offerings. We will see more insurers move from rigid systems to dynamic architectures that use scalable computing power. As more insurers gain sophistication in how they manage and integrate data and use analytics, new levels of agility in risk/portfolio balance, market approach, and organizational structure will be recognized.
There are great stories of success in the marketplace, and there will be many more in 2015. SMA notes that it is not just market leaders making progress; there are many market movers doing remarkable things. Good years lie ahead. It is an exciting time to be part of our industry.
(Deb Smallwood is the Founder of Strategy Meets Action (SMA) , an advisory services firm offering retainers, research, consulting, events, and innovation offerings to both insurance companies and solution providers. She can be reached at firstname.lastname@example.org.)
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