Even though it's a $1.2 trillion industry in North America alone, insurance has in the past been characterized as slow and predictable. While there have always been pockets of innovation and transformation that ripple through the market, and events and opportunities have summoned insurers and solution providers to action, something different is happening today. The momentum is forceful. The energy is pervasive. There is significant transformation, and innovation is occurring in new and exciting ways. Finally: Insurance is not dull!
SMA is leading the charge to help the industry innovate for greater success. Using a unique approach to analyze industry trends, best practices, and technology investment patterns and levels, SMA gains and contributes new insights into how insurers can make wiser decisions. And then each year, we recognize several insurers and solution providers that are demonstrating real progress in deploying technology for advantage with an SMA Innovation in Action Award. The award winners will be announced at SMA's annual premier event, the 2013 SMA Summit: INNOVATE for ADVANTAGE, a forum where participants can hear about new industry directions and success stories, as well as discover ways to accelerate innovation and transformation in their own organizations.
The award submissions themselves tell an interesting story about progress in transformation and innovation within the industry. Insurers are transforming beyond the basic transaction processing. They are adding capabilities that are helping them attract and win additional business – business that is delivering higher levels of profit. While many of the projects are relatively small in scope, they are leveraging next-generation technologies and having a mega impact on the business itself. There are three themes that emerge again and again among the submission stories. They involve major improvements in speed, significantly enhanced visibility that is enabling better decisions at every level, and accuracy that is improving both top and bottom line results.
As would be expected, given the wide array of achievements, the ingredients for success are not always the same. However, it is apparent that two key relationships are major determinants in shaping a project's path and ultimate rewards. The first is the partnership between business and IT – the alignment of goals and priorities is imperative. The second is the partnership between the insurers and their solution providers. Time spent up front to get this right is very important.
SMA research and the exciting information contained within the award submissions shows that very few insurers are standing still. They are either moving forward or falling backward. There is no middle ground. For some insurers, it is tempting to believe that the business of insurance will not change significantly by 2020 and that product fundamentals, channels, operations, and business models will remain much the same as they are today. The reality is that taking that view may be a grave mistake for insurers that want to survive and thrive in the future. The changes taking place today, and those that are around the corner, are gigantic. The impact will be felt across the board -- in the design and development of the product and services portfolio, the way the business is marketed and acquired, how risks are selected and prices are determined, in what manner contracts are administered and serviced, and how risks are mitigated and managed.
Major players, both large and small, are becoming more aggressive in the pursuit of a competitive edge, using emerging technologies and new solution approaches to assist them. The level of transformation in each organization, and the amount of progress made or not made, is determined by a unique combination of market forces, leadership insight and strategies, and business and technology capabilities. Today, technology decisions and investments have major implications on the degree of success that individual insurers are able to achieve and their ability to compete effectively as the marketplace evolves.
There are three critical elements that all insurers and solution providers should be considering with every investment. One, if not all of these elements, are exhibited in the stories of successful insurers:
At this year's SMA Summit, Smallwood will be joined by technologists from companies including The Hartford, New York Life, and Transamerica to discuss innovation in underwriting, distribution and more. Register today for the event Monday, Sept. 16, at the Mandarin Oriental Boston.
- Align business and IT strategies, plans, and priorities. In today's rapidly changing market and technology environment, there is simply no time for taking the wrong path or for making investments in solutions that won't meet the needs of the business both today and in the future.
Many transformation and innovation stories point to two fundamental success ingredients. First, the relationship between the insurer and the solution provider is collaborative and productive. Time spent at the front end of a decision to invest in a solution or an approach yields multiple dividends in the long run. Second, business and IT professionals are working together to choose and implement new solutions. With key stakeholders responsible for the success of a project, there is a higher chance for a solid return on the effort.
- Incent a culture for innovation. The easy part of change is coming up with new ideas. The hard part is turning away from what has worked so well for so long. As employees have become more and more specialized, knowledge tends to get trapped in pockets throughout an organization. Resources are specialized and focused for efficiency. Rarely do employees have time to share what they are learning with others in the same or related jobs, or in different business areas. It's not a situation that is conducive to collaboration. The good news is that today, using tools and technologies that facilitate collaboration, insurers are able to work around and through the traditional organizational boundaries to tap into individual and collective knowledge.
It's time for every insurer to look closely at how their IT investments are influencing and nurturing innovation. Next-gen technologies need to be taken seriously. They provide tremendous opportunities to enable the small actions that seed the big picture, and produce the greatest returns.
- Create an agile foundation. In the never-ending quest to keep the business up to date and in step with customer and partner demands and expectations, the need for innovative thinking, active imagination, and fresh approaches are challenging insurers now more than ever. Insurers are not only facing a raised bar for customer satisfaction, they are seeing a whole new way of doing business emerge.
The key watchword for the next decade is agility. To gain and maintain market share and keep the business operating with a satisfactory profit level, solutions and architectures will need to be adaptable, flexible, fluid, responsive, and more. The architecture is becoming an increasingly important factor in determining agility.
There is no question that it is a time of many challenges for the industry. While it is easy to view the business climate through the glass-half-empty lens, it is important to note that the glass-half-full lens likely presents the most realistic picture. Opportunity abounds. More solution options are available now than could be imagined a mere five years ago – thanks to next-gen technologies. There are novel ways to reach and excite customers. Expanding, readily-accessible information and sophisticated analytics are providing insights to improve decision-making at every level of the business. Insurers can now harness and harvest the best of the innovative and forward thinking ideas.
About the author: Deb Smallwood is founder of Strategy Meets Action (SMA) and is recognized for her expertise on investing in technology to influence competitive advantage in the insurance industry. Exclusively serving the insurance industry, SMAblends unbiased research findings with expertise and experience to deliver business and technology insights, research, and advice to insurers and IT solution providers. She can be reached at email@example.com.Comment |Print |More InsightsWebcastsWhite PapersReports