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My humble view on insurance transformation [part IV: The incumbent fights back]

Photo by Daniel Cheung on Unsplash

It seems that an entire industry is caught by the digitization fever. I observe a wild spread of seminars and conferences about digitization, hundred new digitization experts, a lot of new startups, at least the term InsurTech is «en vogue» and to do something in the digitization area is hip and already mainstream.

Up to now, this is all pretty much about «talking» and less of «doing». I believe that the industry needs a little less conversation and a little more action.

Let’s face it, the InsurTech movement is nothing more than a little plant yet. And this tiny plant will grow large. In fact, the first half-year of 2017 is shaped by accelerated activities on insurance carrier side as well. Thereby, the incumbents operate in different activity modes:

  • cooperation with an innovation lab
  • founding of an own innovation lab (e.g. with own and/or external staff)
  • cooperation with an accelerator program
  • launching of an own accelerator program
  • cooperation with InsurTech hubs
  • cooperation with single InsurTech
  • develop own InsurTech

It is very difficult to say, which of these modes from above are promising and which mode is the best. This probably depends on the involved companies and it probably takes several activities in parallel to handle successfully this transformation. I observe that independent from the prevailing mode the following hurdles and shortcomings are predominant. The most striking and obvious dangerous development is that activities in the area of digitization are not connected to the current business model and not targeted to yield a quick win. In addition, besides the pure business area, there are also some wrongs in the soft skill area. Usually, a decent cooperation management is missing and the entire organization (i.e. structure and human resources) is not prepared.

And yes, a lot of companies are still doing nothing at all. Although it is so important to be part of this game.

The value chain is transforming. In the past and still up to now, the sales forces (partially controlled by the insurance companies) have the valuable contact to the retail clients. This will change. The power moves back to the retail client and then probably directly to independent service providers and platforms, to which the old sales forces and the insurance companies have to connect in order to be still part of the business chain.

In order to be able to connect to such platforms, a lot of things have to be prepared on insurance side. Furthermore, if the insurance company wants not to be a mere product provider to such a platform it has to think about own developments in this area, too. Thus the one and only option for an insurance company probably is: enhance the business model or be disrupted!

Although we have to state that there are already many well-intentioned activities on insurance side, I have to realize that most of the insurance companies miss a masterplan.

Read more about the masterplan in my next blog post. Read here the introduction and all prevoius parts of my series of posts.