Reverse the Perspective and Become Demand-Led
Matt Josefowicz | May 13, 2014
The insurance industry has a tendency to view the world from the inside out, but the industry needs to reverse that perspective and look at itself from the outside in if it is to have a chance of meeting rapidly-evolving customer needs and competitive necessities. Insurers need to consider market and operational needs as they plan product, service, and technology strategies, rather than starting from their own understandings of capacity.
Demand for Insight
At the recent Novarica Research Council meeting, attended by more than 70 insurer CIOs and senior IT executives, data and analytics expert Adam Braff hit on this theme in his opening presentation on “Cooking with Big Data.” The first of his five guidelines states: “Figure out what people want to eat before you go shopping.” Too many analytics efforts start with gathering data rather than thinking about how insights might be operationalized to drive better business results. The supply of data and analytical capability is leading in too many cases, rather than the demand for insight.
Demand for Coverage
Changes in the ability to access, communicate, and analyze information means that buyer and distributor expectations about speed, flexibility, and even value propositions, are diverging from insurers’ own understandings of the world. While insurers start from a comprehensive understanding of risk and design complex products to address this comprehensive view, most buyers are not even aware of most of the attributes of their coverage. The supply of risk analysis and distribution is leading in too many cases, rather than the demand for coverage.
Demand for Capabilities
Inside insurers, IT organizations need to be more focused on the creation of business value rather than building or maintaining systems. This involves educating IT staff about business needs and goals as well as educating business leaders about the implications of their requests. The supply (and cost) of technology is leading in too many cases, rather than the demand for capabilities.
Meeting the Demands
This will be a massive shift for the insurance industry, but a necessary one. Access to information, communications technology, and analytical capability is democratizing the ability to price and sell risk. Insurers (and insurer operational and IT executives) that focus on the demand for coverage and capabilities will be better positioned to thrive. Those that don’t may soon find themselves with much less demand for what they have to offer.
Matthew Josefowicz is a managing director at Novarica, a research and advisory firm focused on the insurance industry in the U.S., Canada, Bermuda, and UK. He can be reached directly at firstname.lastname@example.org.
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