The future of the insurance industry: A capabilities perspective

The insurance industry is experiencing a perfect storm. Changing customer demands, technological advances, growing data volumes, the impact of natural disasters, shifting demographics, and evolving regulations are just a few of the factors shaking the industry to its roots.

Customers want more from their insurance, whether they are businesses, consumers, or businesses that provide services to consumers, they all now expect the speed and elegance of digital retail, transacting business when and where they want, through the channel of their choice. and customers are increasingly savvy and can instantly compare offers and prices with the competition.

Technology creates a wealth of new possibilities. The advent of big data is creating opportunities for insurers to harness unprecedented insight into the lives, property, health, wealth, and behavioral patterns of their end customers. Advances in artificial intelligence are enabling insurers to sift through this data quickly and efficiently, allowing for more personalized approaches to risk management, lower liabilities, and, in turn, lower premiums.

The ability to access data faster than ever before also enables insurers to settle claims faster, what used to take weeks and months is now happening in days or hours. In the past, a common strategy for insurance players was to wait for the competition to move first to see whether or not a new direction was successful. But this strategy does not work in this disruptive environment with new competitors from outside the insurance space. All of these changes have created new players with new ways of working and competitive business models. By the time you decide to move, it may be too late.

So, with insurers looking at a very different market going forward, how can they manage change and thrive? In this environment, it is important to learn quickly and, when you fail, to fail quickly so that you can learn your lesson and move on. Established players have to find ways to be more versatile: think like a disruptor and act like a start-up, while always keeping a clear focus on the customer.

In times of rapid change, executives find it difficult to separate fact from fiction, are easily seduced by “the latest trend” and tend to blindly copy what the competition is doing. But following the crowd is not the answer. The most successful companies in any industry understand that they must build a strong and distinctive identity that allows them to grow their own market position, rather than responding to a market created by others.

Creating such a strong identity means you need to be very clear on how you are going to deliver value to your customers in the future, your “play” and also be very focused on building the few differentiating skills that make it Allow you to achieve this value better than anyone else. Once you know what skills your organization needs to deliver, you can develop a skills agenda that will take you from where you are today to where you need to be tomorrow. It’s important to consider how quickly you can build these new capabilities and when they need to be mature and integrated.

Should you build them organically? Should you acquire them through M&A? Or should you work with other players? When you are clear about what specific skills you need to excel, you can focus your entire business on what really matters to your customers and build a powerful growth engine. Disruption is here to stay, and not everyone will succeed. It is the players who have the courage to commit to an identity based on what truly differentiates them that will have the opportunity to shape the insurance industry of the future.