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What Are Adaptive Target Operating Models and Why Do Re/Insurers Need Them?

August 20, 2018 | Sachin Kulkarni and Kalpana Ganesh

Just as there are calms before storms, there are lulls between leaps of change and progress. With the introduction of capabilities such as AI, machine learning, RPA, and blockchain, it’s fair to say the insurance industry is in a technological leap unprecedented, perhaps, for at least a generation. The current fourth industrial revolution will present challenges and opportunities, and usher in significant changes in the business of insurance. One primary challenge for the industry is this:

With tried, true, and relatively staid operating models being disrupted by an insurtech and technological leap, how do we manage the resultant forces of change? More pointedly, how do we create a context in which to more constructively embrace change and the inevitable pressures of transformation? At Xceedance, our answer is Adaptive Target Operating Models.

Say What?

Target operating models (TOMs) aren’t new. Simply put, beginning with an organization’s as is state, they define the organization’s desired or to be state. That’s good. And TOMs work… to a point. But they reach the limits of their effectiveness in their static natures, when their inflexibility renders them obsolete. What’s required is a combination of framework and methodology that provides adequate structure, even as it allows the flexibility to accommodate changing business conditions, technologies, and market requirements.

Enter the Adaptive Target Operating Model.

By collecting industry benchmarks, by segment, for essential operating criteria — and by analyzing and applying those benchmarks with our knowledge, experience, and expertise — we’re able to create Adaptive Target Operating Models for diverse industry segments. The organizations in each market segment would have a unique Adaptive Target Operating Model. And the benchmarks for each are continually updated with the latest contextualized numbers and trends.

We Have the Intellectual Capital

With a team devoted to R&D, our Adaptive Target Operating Model framework is constantly evolving. Using data from the industry at large — combined with insights from working with our clients — the framework anticipates and accommodates change in technology, processes, economic conditions, market opportunity, consumer demands, regulatory environments, and more.

Within this evolving framework our consulting team assesses current metrics (productivity, costs, ratios, among many) and documents as is states, to help insurers create optimal to be states, that map constructively, consistently, and realistically to industry frameworks for markets, geographies, and organizational sizing tiers. And the Xceedance framework is as applicable to startups as it is to well-established insurance organizations.

With Adaptive Target Operating Models, we’re able to help re/insurers better manage the industry’s technological and business process leaps, and those to come. And through the combination of Adaptive Target Operating Models and strategic consulting, Xceedance continues to fulfill our mission to provide SOS — Strategic Operations Support.

Sachin Kulkarni is senior vice president, consulting services and Kalpana Ganesh is vice president, global insurance services at Xceedance.

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