Other parts of this series:
These six evaluation methods will help insurance providers identify business opportunities and threats in the emerging digital economy.
Successful insurers have long built their businesses on their ability to assess risk, manage income and compensate customers for misfortune. Now, they have to change. They need to broaden their businesses. And they must do it quickly.
The reason? Digital disruption. The rapid spread of digital technology across the insurance industry is undermining many of the sector’s traditional business models. But it’s also creating a myriad of new opportunities for carriers.
Far-sighted insurers such as John Hancock, MassMutual, as well as a host of agile start-ups that includes Ovid, Wefox and PolicyGenius, are using digital technology to reach new customers and secure innovative revenue streams. These firms have identified some of the “sweet spots” in the insurance industry that are likely to yield substantial future returns as consumers increasingly crave digital products and services. We’ve termed these key areas of value creation, listed in my previous blog post, “customer delight”, “underwriting excellence”, “risk aggregation”, “selling supremacy” and “product and service innovation”.
To help insurers identify future business opportunities, and track likely threats, we’ve compiled six evaluation methods. Insurers can use these methods as lenses to better see and select new ways to adapt their businesses to the demands of digital disruption.
Industry macro-economics: Assesses the way economic forces within an industry change how and where value is created. Proponents of this approach include insurer Ping An and digital marketing firm Agency Platform.
Critical to the success of any new business model are the resources and support it receives. Insurers launching new digital ventures need to balance carefully their allocation of funding, technology and human capital. Insufficient support will stifle new initiatives while over-extending the allocation of scarce resources could jeopardize the whole organization.
These steps will help an organization successfully rotate to the new digital economy:
Define ambition: Assess strengths and weaknesses across the five key areas of value creation.
Determine status: Evaluate the likely impact of current competitors and disruptors on the business.
Design future: Identify the capabilities needed and devise a multi-speed strategy to bridge gaps in skills and resources.
Execute the new: Create a digital innovation steering group to track and guide progress.
For further information about the future of the insurance industry have a look at these links: