Other parts of this series:
- Insurers must up competitive agility to counter rising disruption
- Three-point business strategy gives insurers a competitive edge
- Insurance execs must ask tough questions about competitive agility
- Insurers must be wary of pitfalls on the path to competitive agility
- Correct methodology crucial for carriers seeking competitive agility
Carriers’ traditional operating models are too cumbersome and inflexible to adapt to the fast-changing needs of the insurance market.
Insurers need to move quickly to fend off rising competition in their traditional markets and to seize new business opportunities. Many carriers, however, are likely to stumble. Their business strategies are out of sync with the needs of their customers. And, their operating models are too cumbersome and inflexible to adapt to the fast-changing needs of their markets.
Competitive agility is now a key requirement for insurers striving to succeed in an industry where digital disruption is set to increase in scale and reach. Our research shows that the insurance industry is ripe for much greater disruption. Of the 20 industries we surveyed, insurance is currently experiencing one of the lowest levels of disruption, yet is the fourth most susceptible to future disruption. Only utilities, banks and energy companies are more vulnerable.
Why are insurers heading for greater disruption? Here are some of the key reasons.
- Low revenue growth.
- Weaknesses in operational efficiency and innovation.
- High labor and transaction requirements.
- Lack of brand prominence.
- High levels of trapped value.
- Modest investment in advanced digital technologies.
In the past, when insurers needed to push back against rising competition they would double-down on growing revenues. Or, they would curb expenses to improve profitability. Sometimes, they would launch marketing campaigns to strengthen the trust and support of their customers.
Usually, these maneuvers worked. Now, times have changed.
Digital disruption is increasing the speed, volatility and transparency of the insurance business. To remain competitive, insurers can’t resort to their past responses. They must drive growth, improve profitability and strengthen the sustainability of their businesses all at the same time. This requires degrees of flexibility and agility that would have been unimaginable in the past.
To achieve competitive agility, insurers need to transform their business strategies and operating models. They must put digital technology at the core of their businesses. Furthermore, they must carefully integrate growth initiatives, cost controls and sustainability activities.
In my next blog post, I’ll discuss why an integrated business strategy is essential for insurers striving for competitive agility. Until then, have a look at these links. I think you’ll find them useful.