In several of my blog posts, I’ve extolled the value of insurers establishing “red teams” to hedge the decline of many of the traditional risk pools. Red teams operate outside the day-to-day business operation, which allows for true creativity and the luxury to fail.
Insurance is a notoriously risk-averse business in which most organizations do not tolerate failure. As Albert Einstein said, “We cannot solve our problems with the same thinking we used when we created them.” In order to extend the thinking, insurers must take a page from the venture capital industry and begin exploring opportunities to learn and hedge their existing business models.
Why is a red team necessary? The simple example is that the person underwriting personal auto is not likely to be the one who masters the nuance of risk related to autonomous/self-driving vehicles. New skills, new thinking, and new culture are required to break out of old mindsets.
We’ve talked a lot about how declining risk pools are both a reflection of societal changes and a reality to which insurers must adapt. Auto, marine, commercial, travel, home and life are all the traditional risk pools that are in decline for a number of reasons. This decline should be counterbalanced with the exploration of new risk pools such as data privacy and ownership, autonomous vehicles, the Internet of Things, biomedical and nanotechnology, robotics, neuroscience and artificial intelligence. Shifting the focus to these emerging risk pools ties back to insurance’s social and corporate responsibility of making innovation a safe reality.
But it is difficult to find the person in most insurance companies who would stand up and say, “I own that problem!” Most of the industry’s day-to-day focus is on current risk pools represented by specific products. Addressing these risk pools and needs requires new thinking—especially since the answer may no longer be about more insurance policies/products as much as becoming an advisor to help companies and individuals manage risk.
Red teams have the opportunity to focus on:
- Creating new markets to address new needs and their associated risks
- Driving new and diverse revenue streams
- Focusing on driving exponential growth
- Launching an unencumbered culture of venture, innovation, and learning from “failing fast.”
Accenture partners with many firms to help establish these red teams and help a broad array of ideas matriculate through a venture-capital-like process.
In future blog posts, I’ll delve deeper into this concept and how its use can help the insurance industry adapt to meet the current and future needs of society.
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