Following the annual three-day gathering of approximately 7,000 insurance industry leaders last week at InsureTech Connect in Las Vegas, we reflect on what we heard. Five themes were clearly top of mind for most attendees.
1. Leveraging digital and analytics to reduce costs and streamline current operations. Freeing up capital to invest in growth, customer and agent experience, and other priorities gives carriers the flexibility to strengthen their long-term relevance. As a result, many carriers are prioritizing productivity and using the digital disruption in the industry to accelerate bottom-line impact.
Digital and analytics solutions have helped many carriers identify and harness opportunities to improve productivity across the value-chain, including overhauling general expenses and overhead, optimizing IT service contracts, and reducing claims losses. As innovation continues, incumbents face the difficult task of integrating these technological advances into their legacy operations and navigating an industry culture that often resists digital adoption and change.
2. Using data to enhance customer experience. Developing a leading customer experience begins with knowing your customer. In an industry hugely influenced by intermediaries, sometimes the target customer—be it advisors, end consumers, or another group—is not obvious. Once that target customer is defined, data can support determining how to most effectively understand and support them.
Data is the backbone of much of the disruption and technological advancement occurring in the industry. As a result, a focused data-architecture strategy is critical for supporting both core and digital priorities. This data strategy is also a foundational capability that many insurers overlook as they move to implement more advanced digital approaches such as artificial intelligence or robotic process automation (RPA). But maintaining and organizing data, analyzing data, and making decisions using data are the best ways to enhance and customize customer experience. When transforming customer experience, data is at the center of comprehensive, journey-based approaches to streamline processes and interactions that customers have with insurers.
With more carrier options and more commoditization across products, a leading customer experience has never been as important as it is today. Data is an integral competitive advantage to forming insights that gain customers' trust and approval, and establishing a value proposition that is tied to customer needs.
3. Insuring and managing risk. Insurers must now address an unprecedented amount of new age risk, including that from cyber, cloud computing, and autonomous vehicles, among many others. With the rapid pace of technological advancements, the scope of risks that carriers must protect themselves against (both business risk prevention and mitigation, especially regarding data protection) and insure others against (underwrite) will only continue to grow. To keep up, insurers must understand how to apply new solutions—including AI, predictive analytics, telematics, robotic process automation (RPA) or chatbots, text ingestion, and content-management systems—to analyze and evaluate their risks. Further, in the face of a significant increase in demand, they must use these new tools to determine which risks they are best suited to underwrite based on their appetite and underlying portfolio.
4. Finding growth outside the core. With a largely saturated market across life and P&C, insurers are now searching for their next growth horizon and taking a three-to-five-year view of developing new businesses. Insurtechs are expanding their influence across ecosystems, and carriers are exploring how to best use their core competencies to enter adjacent growth markets. Many carriers have created venture funds to test new growth opportunities while others have installed innovation hubs within their core operating businesses. As lines continue to blur across health, wellness, personal finance, insurance, and other industries, the ability to develop flexible capabilities and integrate with third-party platforms or application programming interfaces (APIs) is becoming essential to enabling successful growth in the near term. Over longer-term horizons, insurers are investing in internal innovation capabilities that link to continuous improvement, pursuing digital upskilling, and adopting a venture capital–style approach to evaluating opportunities.
5. Securing top-tier digital talent. With an aging agent population—our research shows the average insurance agent age is 59—and higher demand for digital and analytics talent, carriers are facing pressures to upskill and refresh their talent pools. The issue of an aging population extends beyond just insurance, with the proportion of the world's population over 60 years-old expected to nearly double from 12% to 22% between 2015 and 2050, according to the World Health Organization. While some carriers are pessimistic about finding new talent and believe that millennials and recent graduates have limited interest in insurance, others are cautiously optimistic that the creativity emerging from insurtechs, new ventures, and disruptors will attract top talent to the industry. With the evolving demands that technology is placing on the industry’s workforce, digital skills should now be considered when evaluating most roles whether they be producers, underwriters, technologists, managers, or service representatives.
It is clear that there will be winners and losers in the war for talent. Finding innovative ways to excite and retain top talent in both competitive urban markets and more fragmented rural locations will be an important differentiator over the next decade.
These topics are top of mind for most carriers as they face extraordinary innovation and disruption across the insurance industry. If the vendor pit at the InsureTech Connect expo was any indication of the future, the pace of this innovation will only accelerate. Establishing a strategic approach to productivity, data, customer experience, risk management, growth, and talent is becoming table stakes to remain competitive in an ever-changing space.