Volatility accelerates the pace of insurance industry evolution
COVID-19 was a black-swan event that created unprecedented challenges for insurers globally. In an environment where business dynamics and customer preferences continue to evolve swiftly, the pandemic was a catalyst that pushed insurers to reconsider their product and service distribution models.
How are insurers reacting? More than 90% of the insurance executives we surveyed as part of the World InsurTech Report 2020 said they quickly developed remote-work capabilities at the height of the health crisis and could maintain business continuity. However, the impact on seamless customer engagement was significant.
Without a robust digital infrastructure, firms found it challenging to offer confidence-inducing seamless CX, which may have taken a toll on policyholder trust and loyalty.
Unpredictable times require enhanced capabilities
To successfully meet customer expectations in today’s evolving and hyper-competitive market landscape, insurers require more than the typical capabilities of yesterday’s firms. So, I’m not surprised to see firms working to future-proof their business by deploying intelligent processes across the value chain, becoming agile product developers to enable new opportunities, and taking advantage of open ecosystem collaboration.
Many policyholders we interviewed said they are highly willing to share their personal information for a better experience. So, it goes without saying that real-time data management skills can be critical to understanding customer needs and supporting human-centric design.
In addition to using data efficiently for actionable insights that create a holistic digital experience, the new remote working environment makes intelligent processes and cybersecurity solutions crucial. Lockdowns and social distancing norms prioritized swift and agile development of new products through labs, incubators, and innovation hubs. And, more firms are implementing open APIs to foster ecosystem partnerships and seamless integration with new data sources or distribution models.
As they seek to bolster their firm’s capabilities’ arsenal, insurance executives often ask, “Should we build, buy, or collaborate?”
I suggest carefully examining your implementation timeframe, budget, and desire for autonomy and differentiation.
What’s the best approach to boosting your firm’s capabilities? Weigh these trade-offs
Firms that choose to build capabilities in-house will assume sole ownership of developing, maintaining, and implementing the solution. This approach gives the firm complete control, which can be a competitive advantage. However, it may require a relatively long time to accomplish and a considerable investment. I believe it is best suited for organizations that aim to deploy capabilities that help them stand out and differentiate from competitors.
Insurers that elect to buy capabilities simply maintain and operate an out-of-the-box solution. They can quickly ramp up and have scope for add-on enhancements. Potential downsides include budget constraints, compatibility issues, or internal readiness to maintain and operate the solution.
Collaborate with a specialist for the most cost-effective way to acquire capabilities and to bring the solution to market quickly. I recommend ensuring system compatibility and alignment of shared goals first, however. While enjoying the benefits of time and cost-effectiveness, firms might have to compromise on autonomy or differentiation if the specialist works with other players.
The way ahead
In a dynamic environment, the most successful insurers will be proactive and ready to take on new capabilities to stay ahead of market trends. A shift from capability ownership to shared access is the need of the hour. Shared access will lead to new collaborations with specialists and quick adoption of capabilities, which will allow insurers to focus on improving their core competencies.
Download the World InsurTech Report 2020 to learn more about what it takes to meet today’s most urgent business needs, and feel free to connect with me on social media to take this discussion forward.
VP, Global Insurance, FSSBU, Capgemini.