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Spring education in insurance innovation

March — the time for baseball readiness with spring training and basketball in the March Gala! Without us all knowing, March last year became a symbol of preparedness and madness due to COVID! As COVID-19 increased the pressure on all industries, March Madness never started and Major League Baseball's spring training was also abruptly interrupted after the first game. I know because my husband who has been going for over 20 years to see his beloved St. The Louis Cardinals in Florida were not happy and then we had to try to get a new flight home! Shortly afterwards, baseball was overshadowed by concerns over logistics throughout the baseball season. How would the games be played? Should fans participate? How could the schedule be changed to get some season started?

This year, optimism is in full swing. March Madness happens and speculation about the 64 teams is hot! At the same time, spring training started this week with fans present! Baseball may not be back to the old normal, but it will have fans, it will have a complete schedule (1

62 games), and its return may be a sign of a new normality on the horizon. This means that the spring training in 2021 is particularly important for team performance. But what really happens during spring training? How does each team benefit from this preparatory period? Is there anything the insurance industry can learn from a focused preparation season?

Yes. More than anything, baseball's spring training is about constructing a strategy, organization, processes and technologies that help the team win. Players hone their skills. Coaches and trainers adjust methods and models. Backoffice adapts the strategy and goals to win with the overall profitability. Everyone is obligated to improve the fan experience, whether it is to adapt the supply chain for concessions, install a new digital scoreboard or re-prioritize and exchange resources as specific individuals needed to improve performance. Teams must prepare.

Insurers are as much about winning as baseball teams. Today's market is digital, customer-driven and ecosystem / partnership activated. They are challenged to put together a winning team to create growth and make a profit. They have similar questions to answer. Should we add the features we need to capture the market? Should we re-prioritize our resources to accelerate strategic initiatives? Can we focus and spend this season preparing our organization for partnerships, supply chains and ecosystems that will hold fans back?

Last month, Majesco released Part 1 of two 2021 strategic priorities. Like a scouting report from major leagues, Majesco has mapped the players, the opportunities, the challenges and the surprises. We have taken a snapshot of trends in the industry seen through the eyes of insurance managers. As part of that report, we surveyed insurers on their level of partnership planning, pilot projects and rollout. Not surprisingly, we found a strong relationship between partnerships and new products and channels – which means that the insurers who are ready to win are those who have taken "spring education" seriously.

"Partnership? There is a gap for it."

Competitive market position is about building an ecosystem that plays to your strengths and incorporates partners to fill gaps or weaknesses. Gone are the days when companies would think: " Everything you can do we can do better. "Today's mantra is:" Everything you can do we can be interested in. All markets you reach can be good for us. All technical advantages you can own, maybe we can use it to our advantage It's about doing more quickly!

Last year's Majesco Strategic Priorities survey revealed a relatively slow start in establishing partnerships and ecosystems, with more organizations thinking about it rather than planning, testing or implementing it. we saw some backwards on several co-operation initiatives, perhaps driven by shifting priorities due to COVID, as shown in Figure 1.

Insurers must quickly switch to a new gear to accelerate and u avoid lost opportunities to reach new or substandard markets as well as being at the forefront when it comes to establishing partnerships over others. Failure to acknowledge the criticisms of partnerships and ecosystems is a major blind spot. Our research, like many other studies, has shown strong customer interest in purchasing insurance through other partnerships and channels. In addition, the development and availability of APIs to connect to new partnerships and ecosystems is becoming increasingly important for consideration.

It may help to look at just two examples of companies that have cultivated a collaborative environment to fill their competitive gaps, planting new products in new markets and opening new channels for existing products. For example:

  • Chubb – Launched Chubb Studio "digital insurance in a box." Partners can access their products, services and claims digitally and integrate what they do into what the partner does – embedded insurance. The first products offered include: Health & Wellness, Home Content, Gadgets, Travel and Small Business. [i]
  • Nationwide – Launched its Partnership Program for partners and developers to digitally provide Nationwide products (including auto, home, commercial, pet) on the same digital platform, making the partner experience "fast, easy and seamless. " It provides an integrated "front door" where companies can quickly enable a partnership with Nationwide. [ii]

Figure 1: Insurers' activity levels to add partnerships and ecosystem functions

Our joint research report with PIMA, Navigating A New Era of Digital Technology and Customer Expectations emphasized that companies involved in software and Affinity activities are far ahead of others when it comes to creating and exploiting ecosystems and partnerships – moving from traditional to new, innovative relationships. Based on this year's response to strategic priorities (figure 2), the gaps between insurance companies with and without programs / affinity activities were significant and growing compared with last year's results for strategic priorities – upwards by 40-50% difference between gaps!

Given the rapid development of ecosystems, the transition to a platform economy and an increased focus on a broader customer experience dependent on partnerships, these gaps allow those who actively work with ecosystems and partnerships to accelerate and link relationships while others lag behind. and finally lose the opportunity.

Figure 2: Activity levels for adding partnerships and ecosystem functions, gaps between insurance companies with contra without program / affinity activities

New products and new partners: A match for new markets

Not all insurer segments find it difficult to create partners and to take advantage of opportunities. Our research has shown that insurers with new products blow away their traditional product counterparts when it comes to leveraging partnerships and ecosystems, as shown in Figure 3. Multiline insurance companies are a distant second in most of these activities. Traditional P&C and L & A / Group segments seem to be separated from traditional channels rather than expanding channel selection and reach. The challenge is that they will find limited opportunities for partnership the longer they wait. This will limit, if not contract, their market space and growth opportunities as a new generation of buyers increasingly turn to alternative channels.

The relationship between new products and new partners seems to indicate that creating competence in new product development opens the doors for new partners and makes it easier to create customer-ready ecosystems. Here planning and education are very important .

In the future, insurance companies that want to compete across all current industries must bring their best planning and present the tools needed to capture the opportunities. The enormous size of the tasks may seem daunting, but in reality it is a mental game. Ecosystems of partners already exist. Ecosystems of insurance apps, services and APIs already exist. In fact, Majesco has been very careful to coordinate these partners and ecosystems. All that is needed is the will to change and an openness to new methods that will ultimately prepare the organization to lose the technical debt and become responsive.

Figure 3: Activity levels for adding partnerships and ecosystem functions by industry [19659026] Regulatory Perceptions vs. New Rating Realities

Ask all leaders in the insurance board's room if regulatory issues limit growth and 95% say, "Absolutely." Complex government regulations have traditionally been seen as an obstacle to the industry's attempts to try new things and an obstacle to new competition in the market. But this is changing. Contrary to popular belief, regulators take measures to promote innovation and work with organizations that sell new products and business models in the market. The shift sees regulators as partners working together as the industry shifts to a new digital age of insurance.

With the implementation of insurance innovation sandbox environments in many states, we now know that regulators realize the importance of innovation to meet the changing needs and expectations of their citizens whose interests they promise to protect. AM Best provided fuel for the innovation motive with the introduction of the criteria for innovation classification. And many insurance companies that develop new, innovative products work proactively with regulators to guide and speed up the process.

Nevertheless, most insurers have not yet addressed the importance and impact of regulators as partners. Surprisingly, participation in a sandbox was particularly low in the P&C only segment (average 1.6) and only L & A / Group (1.7), which indicates that they follow traditional products and avenues for approval. The innovation methods to support the AM Best innovation criteria remained the same. This is actually surprising given the poor initial results of Innovation Ratings AM Best published in March 2020. We can hope that 2021 will provide more focus and adaptation.

Partners and ecosystems: Inspiration for insurance

We see major investments being made in new business models, products and services from both InsurTech and current insurance managers who are "early answers" that capture customer and market attention. Some of these companies emerged after the financial crisis in 2008 or in the early stages of InsurTech. Regardless, they serve as examples and inspiration for the types of bold moves that the rest of the industry needs to make in order to compete and succeed in the future of insurance.

  • Automotive Players: GM, Tesla, Volvo
  • ] Outside Players: Petco, Intuit, Walmart, Credit Karma
  • Industry Greenfields: Say Insurance, Spire, Haven Life [19659032] Reinsurance companies: Munich Re, Swiss Re, RGAX
  • Startups: Pie Insurance, Next, Lemonade, Root, Ategrity
  • Embedded Insurance: Volvo, Wrisk, Mylo
  • B2B2C Ecosystems : PingAn, Allianz, Nationwide, Chubb, AXA
  • Membership / Subscription: BOXX Insurance, Zipcar
  • On Demand Insurance: Starr Insurance, First Insurance Company of Hawaii
  • Partnership and ecosystem: Acko + Amazon, Nationwide + Toyota, Chubb + Hodinkee, Root / Lemonade / Ladder Life + Sofi

Change, as we have known it, has changed. It is faster, deeper, wider and more powerful than we have ever been used to before. Forward-looking leaders make bold, revolving speed movements with a two-speed strategy to optimize today's business while creating their future business. They focus on the next generation of platforms, ecosystems, new channels, new products and business models – all important strategies that affect and accelerate growth.

In this new era of insurance, leadership and understanding, the market is changing. Planning and implementation. Speed ​​is important.

Are you in a season of preparations for the future of insurance? Look at your strategic initiatives and see where you stand compared to leaders, followers and laggards. Solve to boldly re-prioritize, pursue partnerships, reallocate resources and accelerate plans with a two-speed strategy to reduce the gap. Read about the latest trends among insurance companies in Majesco's Strategic Priorities 2021: Part 1 report, why next week, be sure to download Part 2, Strategic Priorities 2021: Despite Challenges, Leaders Widen the Gap.

[i] https: //studio.chubb .com /

[ii] Ben-Hutta, Gabriella, Nationwide launches partnership platform December 14, 2020, https://coverager.com/nationwide-launches-partnership-platform/ [19659046]
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