BOLT Blog

How P&C Carriers Can Stay Flexible in a Rapidly Changing World

October 03, 2018
By Tom Hammond

team-7Nimble, flexible, agile. They’re all demands placed on every company today, and their pervasive pressure has turned them into corporate buzzwords. Yet many property and casualty insurers are left to wonder: What does increased agility look like, and how does it improve our bottom line?

“Agility is often confused with a speedy, reactive response,” says Baba Prasad  <http://knowledge.wharton.upenn.edu/article/five-ways-companies-can-nimble/>, CEO of the Vivékin Group and author of Nimble: Make Yourself and Your Company Resilient in the Age of Constant Change. “We can instead think of agility as a speedy and effective response, not just toward current circumstances but also [to factors] that may now be beyond the horizon.”

In a tech-saturated era, technology offers myriad opportunities for insurance companies to become more agile, but relatively few have made agility a priority. According to Hugo Moreno  <https://www.forbes.com/sites/forbesinsights/2017/11/30/5-steps-to-greater-agility-in-your-organization/#6a28ae03d9f4> at Forbes, only 27 percent of companies consider themselves “highly agile,” and only 25 percent say that their internal culture enables agility.

Here, we look at tools and approaches that can help P&C insurers improve their agility, allowing for proactive responses to pressures arising today and in the future.

Strengthen Your Core

At the heart of an insurance company’s critical functions is its core system — and like the heart, the core system must function optimally in order for the rest of the company to be able to respond nimbly to new challenges. Operating on a single core platform provides the stability insurance companies need, says Joseph Pacor  <https://www.forbes.com/sites/sap/2016/05/11/why-transforming-core-operations-is-critical-for-the-insurance-industry/#5af0117e2b0b>, senior director at SAP.

Michael Costonis  <https://insuranceblog.accenture.com/core-transformation-is-non-negotiable-if-insurers-want-to-innovate> at Accenture calls core transformation “non-negotiable” for P&C insurers — at least for those that wish to stay competitive. Yet insurance companies aren’t embracing core transformation at a rate that allows them to keep pace with technological change. While tools like artificial intelligence (AI) and blockchains have the power to revolutionize insurance, “it’s almost irresponsible to be asking which company or technology will disrupt insurance” when so many insurance companies haven’t embraced the core system stability offered by tools like omnichannel customer service, Costonis says.

Core system transformation doesn’t just improve operational efficiency or maintain market relevance. It also lays the foundation for innovation, says Shikoli Makatiani  <http://turnkeyafrica.com/core-transformation-beyond-efficiency/> of Turnkey Africa. And it can provide extraordinary business value, as long as the new core system is focused on changing customer engagement, leveraging a comprehensive approach to data and fostering innovation, Nathan Golia  <https://www.dig-in.com/list/4-ways-insurers-can-go-beyond-core-systems-transformation> writes at Digital Insurance.

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Partner With Tech Innovators

“Mastery of technology will continue to grow as the great competitive advantage” in insurance, says Argo Group CEO Mark Watson <https://www.argolimited.com/future-specialty-insurance/>. Unsurprisingly, insurance companies that are willing to partner with insurtech firms — whether it’s to provide specialty insurance well-suited to the digital world or to leverage a world-class SaaS platform as part of the company’s core system — will maintain a competitive edge in the face of change.

Partnerships within and beyond insurtech can also improve a P&C insurer’s ability to provide value-added services. This is an increasingly necessary justification in an era where technology has cut out the middleman in so many industries.

“Beyond the core insurance offering, forward-looking insurance companies are looking at ways to provide ancillary services to offer additional services to their clients,” says IBM’s Fuad Butt  <https://www.ibm.com/blogs/insights-on-business/insurance/three-ways-insurance-companies-can-modernize-and-deliver-value-added-services/>. For instance, insurance companies offering homeowners policies can build partnerships that allow them to offer discounts or better rates for home security, moving, and even cable or Internet packages.

“Insurers must think about the big picture and develop a holistic approach that is strengthened by InsurTech capabilities, rather than piecemeal adoption,” says Efma CEO Vincent Bastid  <https://www.businesswire.com/news/home/20180521006130/en/World-Insurance-Report-2018-Digital-agility-key>.

Take Advantage of New Insurance Models

In many ways, technological innovations are custom-built to revolutionize the way property and casualty insurers provide coverage. For instance, the Internet of Things (IoT) is edging personalized coverage based on actual behavior ever closer to reality, Sarwant Singh  <https://www.forbes.com/sites/sarwantsingh/2017/02/24/the-future-of-car-insurance-digital-predictive-and-usage-based/#721bf8752fbe> writes at Forbes. Meanwhile, artificial intelligence (AI) has the potential to partly or totally digitize up to 90 percent of current insurance industry jobs, says Hugh Terry  <https://www.the-digital-insurer.com/technology-driven-value-generation-in-insurance-by-oliver-wyman/>, founder of The Digital Insurer.

It is perhaps no surprise, then, that technology is starting to change the underlying business models of insurance, Sarah Kocianski  <https://www.businessinsider.com/insurtech-insurance-technology-report> argues at Business Insider. The rise of insurtech startups is only one example. Established P&C insurers are also starting to take a fresh approach to fundamental insurance topics like policy creation, underwriting, claims management and reinsurance.

When companies start from a strong core system and are willing to partner with insurtech and SaaS providers in order to innovate, they can reach into new realms more easily. Products like micro-duration coverage, micro policies designed for access via mobile devices, and increased targeting or individualization in coverage are all natural extensions of current technologies.

These all provide a way for insurance companies to offer the kind of flexibility and agility that customers want, as well, says Pierre Louis Seguin  <https://www.capgemini.com/2018/06/insurtech-opens-new-life-insurance-frontiers/> of Capgemini.

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Empower Employees and Agents for Greater Flexibility

While technology can help P&C insurers become more agile, implementing new technology simply to have new technology won’t always lead to improvements, says Ilya Bonic, senior partner and president of career business at Mercer. Instead, “business growth relies on engaging and empowering the workforce,” Bonic says. “It still takes employees armed with the right skills and opportunities to develop innovative solutions to advance their businesses.”

A well-thought-out approach to insurance technologies, including core system changes, should include employees’ insight and training.

Describing Northwestern Mutual’s shift to a more agile platform, client digital experience manager Jill Schindler  <https://www.scaledagileframework.com/northwestern-mutual-case-study/> speaks highly of the company’s efforts to get employees on board with the new system. “At the end of the day, we felt a huge sense of accomplishment,” Schindler says. “Everyone understood what was expected of them” – and performance thrived as a result.

Technology can also free up employees to adapt in the moment, making it easier for them to address customers’ specific needs. In a piece for Forbes, Bain & Co’s Elizabeth Spaulding and Greg Caimi  <https://www.forbes.com/sites/baininsights/2017/12/20/flex-or-fail-why-adaptive-companies-hold-the-advantage-in-digital/#3c88670e3d27> describe how USAA became a leader in customer service in the financial industry by freeing their call center staff from a script. Instead, call center employees are “specifically empowered… to spend as much time as needed with customers to truly understand their needs and solve their issues on the first call.”

The good news? The gig economy has made workers more used to flexibility, adaptation and learning new skills in order to add value for their companies and the customers they serve, says Stephanie Stouck  <https://www.liveops.com/blog/gig-economy-transforming-customer-service/>, director of solutions marketing at Liveops. Just as technology has driven customers to seek a more personalized approach  <http://blog.boltinc.com/insurance-distribution-solution-blog/digital-experience> to insurance, it has also driven insurance professionals to seek a more adaptable, personalized approach to service. P&C insurers can use this adaptability attitude to their advantage in becoming more agile.

Center The Company’s Value(s)

“Being nimble is more important than being right,” says Capriza CEO and founder Yuval Scarlat <https://www.entrepreneur.com/article/297162>, recounting an error in prediction the company made in its early days.

“When we were starting out we made assumptions about our potential customer’s technology usage and needs that weren’t completely accurate,” Scarlat writes. “Making sure we were listening to the market and integrating these lessons into our solutions was vital to our success.”

As customer behavior and demands continue to place pressure on insurance companies, and as society’s incorporation of artificial intelligence and other tech tools into everyday life continues, insurance companies have several opportunities to thrive.

These include operating from a strong core system, leveraging strategic partnerships with insurtech and SaaS providers, and using employees’ abilities to change their approach to business.

In short, that means using tech advances to become more agile while staying true to their core values.

Images by: rawpixel, antonioguillem/©123RF Stock Photo


Tom Hammond v2Tom Hammond, President U.S. Operations

Tom Hammond is an expert on innovation and distribution trends in the property and casualty insurance industry. Based in Farmington, Connecticut, Tom serves as the President U.S. Operations for BOLT Solutions. Prior to BOLT, he was with The Hartford Property and Casualty Company for more than 23 years. His experience included development and direction of Direct Response Marketing, Operational Management, and P&C Strategy.

 

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