Article Synopsis :
Insurance 2.0—an increasingly borderless marketplace where partnerships with InsurTechs, MGAs, reinsurers, distribution channels and even other insurers is not of the future but upon us, asserts this new white paper from Majesco.
Aging incumbents with outdated Insurance 1.0 business models and technology infrastructures run the risk of decline and even irrelevance. ‘Wait and see’ and even ‘fast following’ are increasingly dangerous strategies.
The first half of the paper walks us through a fairly deep discussion on the nature of change and how individuals and companies adjust, cope, and lead in various types of dynamic environments. Lemonade, Slice, Trov, PingAn, and Figo are discussed as insurance-specific examples.
What are the specific attributes of Digital Insurance 2.0? Digital Insurance 2.0 consists of silo-less (or silo-reduced) insurance operations, enabled by digital technologies. It’s a new digitally-fused business platform that utilizes digital efforts to reconstruct a future-proof model with fewer barriers between systems and ecosystems. Digital insurance platforms generally share these traits:
- Optimized customer journeys with deeper more personalized engagement
- Process digitization that improves operational efficiency and customer experience
- The ingestion and use of data-driven insights for better decision-making and to identify customer need
- The ability to rapidly roll out new products and capabilities while expanding into new markets and/or geographies
- Rapid adaptation to business, market or customer changes
Insurance will eventually play in other ecosystems, rather than as an ecosystem itself. This differs from today, where others have to play in the insurance ecosystem (channels, insurers, MGAs, reinsurers, etc.). This shift—and it is indeed significant—demands a shift in leadership thinking from inside-out to outside-in.
To aid in the transition, insurance leaders should ask themselves the following questions:
- What is our business strategy and how are we incorporating a platform and ecosystem approach?
- Have we shifted to a customer-centric focus?
- Are we appealing to customer motivations, simplifying our processes, and creating compelling triggers to act?
- In which markets, and with what customers, will we find future growth?
- What is our partnership approach today and how will it need to change to extend to a broader ecosystem?
- Is our technology platform the foundation for our growth?
- How will we gain access to talent and embrace an entrepreneurial culture to drive innovation?
The catalytic effect of platform solutions in the shift to Digital Insurance 2.0 is rapidly evolving and concurrently laying the groundwork for future reactions. Will AI or blockchain be the next catalyst propelling us to Insurance 3.0?
Though we can’t say for sure, we do know that it took 20-30 years to transition from Insurance 1.0 to Digital Insurance 2.0 and Insurance 3.0 will likely emerge in a third (or less) of that time—probably within the next 5-10 years. Insurers still stuck in 1.0 will likely find 3.0 to be wholly insurmountable.
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Digital Insurer's CommentsPer the report: ‘The greatest barriers to becoming a Digital Insurance 2.0 insurer providing true digital customer experiences are 1) existing culture, and 2) operations and technology within the organization.’ We couldn’t agree more.
Insurers have historically used technology to optimize for efficiency. They’re not very good at using technology for operational flexibility, customer connection and feedback. In an increasingly ‘outside-in’ world these shortcomings are exposed.
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