In our first post of this series, we suggested the best way for insurers to manage generational and technological change is to embrace it and to adapt their operating models as necessary — assuming clearly defined objectives remain as the guiding principle. In this post, we’ll address change in the insurance industry. More specifically, we’ll address distribution channels, technology, and communications.
Change the Channel
- The disintermediation of insurance distribution channels has been a topic of discussion for decades. And while it’s true that agents and brokers rarely go to the homes or offices of policyholders any more to pick up signed policies or premium checks, they remain a crucial part of the distribution chain in driving business for re/insurers. To maintain their competitive advantage, re/insurers seek to drive ease-of-use for agents and brokers with whom they work — by providing access to portals, mobile capabilities, and other self-service tools. In the age of insurtech, the tools vary from company to company, and those re/insurers who are most productively leveraging technology and data are seeing more and better business capitalization, while meeting and exceeding the demands of their distribution partners and policyholders.
- In the insurance industry, technology has been a mixed blessing. On one hand, it’s enabled more work to be done, more accurately, in less time. On the other, it’s been a source of increasing pressure on re/insurers — more responsiveness, more access to people and information, more product choices, more purchasing options, more self-service, and on it goes. Accordingly, the challenge for re/insurers is to manage technological change — or work with service providers who can. The need for technology enablement and proficiency is driven by demographics as well. Millennials and Gen-Z buyers are pushing on legacy business frameworks, and companies are responding as fast as they can (a discussion for another day…).
- As communications guru Marshall McLuhan pointed out as long ago as 1964, the medium is the message. Consequently, organizations which don’t keep pace with changing media and outreach channels, will fail to deliver their messages and value propositions effectively. Social media especially has brought medium and message even closer to insurance consumers by enabling organizations to share more information about themselves and their products; and by enabling people to consume the information they want, from the sources they want, and to interact or transact with the organizations they choose, in the ways they choose, to fulfill their needs.
It’s no wonder people extensively utilize social media communications opportunities: With the abilities to share, like, and comment, users can connect to the products and services they prefer and easily transmit their sentiments to peers, stakeholders, and potential prospects who may otherwise have never heard of the company.
Change or Lose
Insurance organizations that anticipate and embrace change — and do so by employing adaptable target operating models — can flourish competitively and lead decisively. They’ll increase efficiency while reducing costs. They’ll attract policyholders, improving their experiences and increasing their lifetime value. And they’ll enhance the prudence of their pricing models and improve loss and expense ratios.
Perhaps most important, as part of their adaptable operating models, they’ll leverage expert resources to make better operational decisions more quickly.
That’s definitely change for the better.
Travis MacMillian is chief business officer at Xceedance.