Where the World Stands on the Inventive Insurer Journey

New risks, technologies, customer preferences and nimble entrants are changing the insurance landscape before our eyes. As mentioned in our previous blog post, insurance incumbents will need to become Inventive Insurers, adopting capabilities around data-backed customer offerings, automation, product agility and an open ecosystem strategy. To be sure, many insurance firms have begun to acquire some of these capabilities. But how far along are most companies in their transformation? And what can we—as actors and onlookers in the insurance industry—learn from legacy carriers who have taken on Inventive Insurer capabilities?

Conducted in the second half of 2019, our selected study aims to answer some of these questions. Our goal was to assess where the largest 15 P&C insurers by revenue in the US, EMEA and APAC currently stand in their adoption of Inventive Insurer capabilities. To capture this, we divided each capability into a number of benchmarks, as described in the table below. Companies that demonstrate 1-2 of any of the benchmarks in a certain area were assigned “beginner” in that capability, those reflecting 3 received a rank of “proficient,” and carriers displaying 4+ benchmarks were considered “advanced.” For example, if a company displays any 3 of the above benchmarks in the Customer Centricity category, it receives a rating of “proficient” in Customer Centricity. If it demonstrates 4 of the Product Agility benchmarks, it is ranked “advanced” in Product Agility, and so on.

By assessing each of the top 15 companies per region against the above benchmarks, we generated a picture of each region’s Inventive Insurer maturity.[1] Each of the regions emerges as a leader in a different category. The US has the greatest percentage of firms studied who are advanced in Customer Centricity (13%) and Product Agility (20%), while EMEA had the largest concentration of companies advanced in Intelligent Processes (27%), and APAC had the highest amount of firms advanced in Open Ecosystem (27%).[2]

The best-in-class examples from each region prove illustrative for regions that are less mature. American companies, such as USAA, provide a north star in Customer Centricity by creating a unified view of the customer. USAA is able to accomplish this by creating a single member number for each customer (as opposed to multiple policy numbers) to consolidate information from multiple business lines, as well as by leveraging AI to build off customer interactions and deliver recommendations.[3] A number of American firms have also developed infrastructure for Product Agility by building in-house innovation hubs and organizing venture capital groups to sponsor and accelerate innovative insurance solutions.[4]

EMEA has the highest representation of firms advanced in intelligent processes. Zurich Insurance Group has integrated RPA into a number of its back-end operations, such as processing claims, and the Group has begun to leverage cognitive technology to identify inconsistencies between policies and regulations—an otherwise strenuous manual effort.[5][6] Pioneering efforts in blockchain, albeit in the US, are State Farm and USAA, who are experimenting with the technology to streamline and automate the subrogation process.[7] Rather than disbursing numerous payments between the two firms, blockchain will aggregate all payments owed from one firm to the other, settle the difference, and process one or a few payments per month.

APAC’s leadership in Open Ecosystem is owing in large part to some of China’s sprawling carriers. These multi-line insurers, such as China Life Insurance Group and Ping An Insurance of China, have identified a group of ecosystems that overlap with their services—retail banking, healthcare, wellness, auto manufacturing and financing, smart city services, and more—and have expanded their offerings in those areas, either by collaborating with partners or through their own devising.[8][9]

While there are several examples of insurers with mature Inventive Insurer capabilities, the global insurance industry still has a long way to go. The overwhelming majority of insurers around the world rank either beginner or proficient in most capabilities, leaving a great deal of room for the rest of the industry to become more advanced. Those who are currently in the lead should not sit back and rest on their laurels, however, as what is now considered “advanced” within a given capability will soon become table stakes as other InsurTechs and insurers catch up. To truly stay ahead, carriers will have to constantly push the limits of innovation as they build out and refine their Inventive Insurer capabilities. The Inventive Insurer framework outlined above will be a useful tool for insurers to measure their competitive standing and how ready they are for the future.

[1] For a full breakdown of each region, see the appendix.
[2] Based on publicly available information.
[3] https://www.cognitivescale.com/press-release/usaa-invests-cognitivescale-transform-ai-powered-customer-engagement-process-intelligence/
[4] https://www.the-digital-insurer.com/dia/liberty-mutual-strategic-ventures-shaping-the-future-of-insurance/
[5] https://www.altoros.com/blog/zurich-insurance-group-incorporates-rpa-to-achieve-1b-of-savings/
[6] https://www.zurich.com/media/magazine/2017/cognitive-technology-delivers-award-winning-service-to-our-customers
[7] https://newsroom.statefarm.com/blockchain-solution-test-for-subrogation/
[8] http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_LFC_2018.pdf
[9] http://www.pingan.com/app_upload/images/info/upload/31d203a3-cf6d-4335-8d52-146a0f2a4235.pdf

Appendix: