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Strategic priorities: Insights from other insurance companies

February 7, 2019 |
Denise Garth | Subject: Transformation, Change of Risk Profiles and Needs, Nuclear Insurance Systems

InsurTech's innovation climate over the past four years has challenged insurers by forcing them to choose a path, whether or not they wanted. Some insurance companies were ready to move, willing to take the risks and appreciate the future. Some insurance companies were cautious but admitted they needed to make changes. Others were happy to gather information and work slowly towards modernization.

The development of technology and the threat of fast competitive markets have given the insurance companies a new perspective in the short time. Fortunately, four years ago, at the beginning of InsurTech and the disturbance it caused, we began to track how the industry responds to the trends affecting the insurance … identify Knowing ̵

1; Doing Gap. The gap highlights that insurers know and recognize changes in the industry, but many are not planning and making fast enough. Why? They strive to maintain strategic direction, suffer from limited investments and violate competing priorities.

Majesco's fourth annual strategic priority survey provides a strategic lens to the industry that now clearly reveals different ways that insurers take. You can download the entire report here. The trends and initiatives we have tracked over the last four years show three separate paths that have significant consequences for growth and future relevance. The three roads include:

  • Modernizing the existing company – Replace older systems in a private or public cloud to maintain and grow today's business.
  • Optimize Business Today Create new digital features to protect and grow today's customer base.
  • Create a new company for tomorrow – Build new business models for a new generation of customers and products.

Today, as we look deeply at the insurer's insights from the survey, you can compare which other insurers think of the key issues, strategies, techniques, and relationships that will move them into the future. Do your strategic priorities (and your) matching efforts remain competitive?

Ready, Set, Know

Majesco's strategic priority survey is not just about tracking strategic trends. It is about following a trend of a trend through an insurer's pipeline of projects and development. For Majesco to capture important starting moments, we have designed our survey to include the trends that are not even on an insurer's radar yet. The first step in the start line strategic priorities is to know and recognize a trend so we look at trends through multiple lenses. We look at technology. We assess customer travel and distribution channels. We are considering trends in partnership and ecosystems. We also extrapolate trends based on perceived challenges. Are insurance companies focused internally on their processes or externally to meet customer and market needs with digital opportunities?

To determine the context of these deeper probes, we gathered insurers' views on their growth and strategic activities from the previous 12 months (see Figure 1). This year's result shows a strong increase in activity focused on modernization by replacing or replacing nuclear technology. The number of companies claiming that they are experiencing rapid growth is also higher than in previous years. The business also took off on new product development and business model development. The channel expansion activity, however, has been flat . [1]

  Company state - last 12 months

Figure 1

Which technologies are important for business models?

When we asked insurers what techniques were important for their business models. There was a strong response to the basic technology for platforms, including clouds, mobile, open APIs, cognitive / AI and with microservices behind (see Figure 2). These are core technologies that are necessary when we quickly move into demand, platform and API economy by enabling speed, innovation and flexibility in a rapidly changing market. They help insurers meet the demand for customer expectations, the security required to handle new risks and the opportunities that arise in new market segments.

  Important technology for insurance industry models

Figure 2

Digital payments, chatbots, and IoT were close behind and are critical technology for customer engagement. There was strong interest in social, blockchain and telematics as well. It is particularly important to note that over one third of respondents see blockchain as important. The increased activity in the industry around blockchain will continue to drive more planning and making, shifting us again to Insurance 3.0. Most insurers do not believe that drones, wearables, autonomous vehicles and AR / VR are important or important technologies. All of these can be regarded as blind spots when we consider how fast the industry has moved over the past four years. See last week's blog, Pushing Priorities, on how visionary leaders should keep tabs on disturbing trends, like drones.

How do our technologies and channels match customer needs?

The technology insurance companies use play a critical role in customer travel, from survey to purchase and service. Paying bills, filing claims and receiving receivables is what the insurance companies perceive as the easiest for their customers (Figure 3). Entering a quote and making a policy change feels a little more difficult, but examining policy offerings, completing a policy application and tracking the progress of a claim is considered the most difficult. These views are consistent with InsurTech's perceptions according to our latest InsurTech report.

  Insurance customer's resource pain

Figure 3

Surprisingly, the distribution strategies are highly concentrated in traditional channels: Agents / Brokers and Website / Portal (Figure 4). Here, between Figure 3 and Figure 4, we find a crucial link. The "difficult" services for customers, such as investigating political offers, quoting and completing applications, may suffer from a lack of channel options. All channels below the red line in Figure 4 can be used to meet customer expectations and increase the possibility of closing sales.

  Channels used to reach customers and markets

Figure 4

It is also surprising how disappointedly low mobile app usage is, given that it is a investment capacity in the digital time and the high desire we found in both our consumer and SMB research. The most important for the insurers is to offer a wider range of channels that extend the market's reach and meet the expectations for where, when and how customers want to get involved.

How do we feel about partnering and the use of ecosystems?

As we InsurTech: Energizing Shift to Digital Insurance 2.0 an important condition for success in Digital Insurance 2.0 is recognition that it is no longer desirable or optimal to "go alone", especially in a "Platform economy" "where ecosystems are a multiplier effect for growth. Most insurers agree on the value of these relationships, with 80% indicating that they are involved in at least one partnership or ecosystem. Other insurance companies, reinsurance companies and insurance technicians are the most popular partners / arrangements, each with over 40%. Large insurers (those with SEK 1 billion or more in annual premium contributions) are much more involved with InsurTech's and other industrial segments compared to inter-market insurance companies (see Figure 5).

  Ecosystems and Partnerships

Figure 5

] With almost 40% of insurance companies already partners with InsurTechs, it follows that they strongly see InsurTechs as potential solution providers (80%) and partners (73%). Interestingly, only 42% see them as a potential acquisition and 36% as a competitive threat. However, company size is also important here, with nearly 90% of the large companies seeing InsurTechs as partners or solution providers, and 56% consider them as potential acquisitions.

What do we think of our greatest internal and external challenges?

Over Over the past four years, we have followed the insurers' levels of concern for 16 internal and external challenges. Significant upward trends in 8 areas are reflected in the results for the year, suggesting a potentially similar increase in urgency to act. 5 out of 8, however, are internal challenges, including data and analysis, talent, digital capability, data security and IT and business strategy adaptation. Although these are absolutely important, the focus is on the imbalance between internal and external challenges. As we have stated in previous reports, the risk that the InsurTech competition entails is that InsurTechs take an external comparison with an internal perspective and places them in order to more easily meet the customers' and the market's requirements rather than the operational ones. This danger arises larger through the lower level of InsurTech, which again shows that traditional insurance companies may not understand the effects of external challenges.

The external challenges that insurance companies find most pressing include regulatory requirements, the rate of change and the change of customer expectations.

In our next blog, Responding to Priorities: What insurance managers do differently we look at our investigation efforts through the lens of Digital Insurance 2.0 leadership traits. Is there a set of criteria that insurers can use to find out where they are in the industry and how can they know that they choose a path that takes them to leadership position? For a preview, be sure to read Strategic Priorities 2019: Accelerate the path to the future of the insurance .

[1] Note! The channel expansion was not included in the survey 2015-2016.

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