Article Synopsis :
Today’s insurance industry is a product of all that came before it. But it is at an inflection point.
Traditional risk management is being redefined and an increasing emphasis is being placed on prevention rather than indemnification.
New model in play
At the centre of the new industry are consumerisation and digitalisation. Consumers expect services to be individualised, personalised and on-demand. Digitalisation runs through everything from customer touchpoints through to decision-making processes.
This new environment requires new business models such as event-driven parametric insurance, risk protection services and services that are complementary to insurance.
Insurtechs are leading the charge
Insurtechs are by their very nature agile at their core, They are rewriting the rules of business and succeeding while the traditional players flounder.
The established carriers still have extensive manual processes, but some of the legacies is cultural and some leaders believe in those processes, inflexible legacy systems and a heavy dependency on agents.
Insurers are setting up ventures in parallel to their traditional business. These ventures have proliferated through establishing dedicated standalone operations.
Liberty Mutual’s Solaria Labs, MetLife’s LumenLab, Guardian Life’s GIS Strategic Ventures, American Family Ventures, MassMutual Ventures and Aviva Ventures, are just a few.
Some non-insurance entities have also set up parallel ventures that are looking to exploit the opportunity for opportunities in the insurance space.
It’s not easy
This Cognizant white paper looks at the challenges facing insurers seeking to establish these ventures and how successful business and operating models can be defined.
Setting up an insurance venture is complex. It requires the agility of a startup, insurance knowledge and the resilience to overcome failures.
The right design principles must be identified and then ‘imagineered’ to incubate the venture and design the operating model.
It takes different types of skill, and Cognizant wants you to remember that choosing the right partner to complement internal know-how can be the difference between success and failure on major projects such as this.
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Digital Insurer's CommentsThere is still time for incumbent insurers to get with the digitalisation programme and find partners among the insurtech community, or form their own incubator to develop the capability.
However, that opportunity won’t be there forever, so the time to act is now.
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