Insurance CEOs continue to report that theirs is one of the most disrupted industries. However, their mood is increasingly positive.
Among the many reasons for the positive outlook is that the anticipated disruption from incoming competitors hasn’t materialised to the extent that was feared.
But, having perhaps overestimated the impact of outside threats and short-term disruption in the past, could insurers now be underestimating the urgent need to become digitally-enabled, customer-focused organizations with flexible business and operating models?
More insurance CEOs are concerned about the pace of technological change (85%) than leaders in almost any other industry. Technological advances are changing business and operating models, which is challenging to an industry that’s accustomed to slow evolution rather than rapid transformation.
Getting up to speed demands a clear strategy and roadmap for decommissioning legacy systems, accelerating automation, and laying the platform for the next wave of transformation.
Keeping pace demands a readiness to bring innovation out of the fringes and into the mainstream of the organisation. It also requires a willingness to experiment and even fail, albeit fail fast and move on.
Driving innovation and knowing customers require dialogue between human and machines in a ‘bionic’ organisation. This isn’t about one dictating terms to the other, but humans communicating with AI and robotics to mutually improve outputs.
Becoming bionic requires digital talent, which can be difficult to attract. Only 19% of insurance CEOs think it’s easy. And it isn’t just digital skills that are in demand, but also creativity and emotional intelligence. 86% of insurance CEOs believe they need to strengthen their organisation’s soft skills alongside digital ones.
The ideal talent mix combines emotional and technological capabilities. These typically exist within siloed pockets, but they need to come together within a more collaborative organisational design.
Very few insurers have all the resources they need to become truly cutting-edge businesses. In response, nearly half (49%) of insurance CEOs are planning a new strategic alliance or joint venture to drive profitability and growth over the next 12 months, reflecting the increasing importance of partnership ecosystems.
InsurTech businesses are likely to be receptive to offers of partnership and even acquisition. While they may have the innovative technology to respond to changing customer demands, establishing viable platforms for asset management, retirement and group policies is expensive, as is entering many market niches. We’re seeing more tie-ups with larger players as a result.