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If living through a pandemic has taught us anything, it is that no one (or no industry) is immune to disruption. Though insurance has historically been slow to change, the past few years have made it evident the industry is, in fact, capable of evolving faster and pivoting more skillfully and mindfully than was once thought. And, now that there is a solid precedent for evolution, insurance seems poised to advance even further in 2022 and beyond.
So, rather than talk about what is in store for the next 12 months or so, let’s take a different approach and walk through how insurance leaders, in the face of disruption and uncertainty, can build sustainable businesses and grow through change, no matter what that may look like.
You can’t just talk the talk, you gotta walk the walk
Staying up-to-date with the industry means constantly consuming copious amounts of articles, LinkedIn posts, conference sessions, and other content, all filled with examples of how some companies are influencing change in insurance. And, while these innovators should serve as a source of inspiration, such stories won’t do much unless the learnings can be internalized and acted upon. Sometimes that’s easier said than done, I know.
In a risk averse industry, it’s almost natural for us to avoid implementing new ideas or strategies until everything is “perfect.” However, we need to alter our mindsets to focus on progress, not perfection. Whether you are building a new product, establishing a new efficiency, or testing a new distribution channel, you will never move the needle if you don’t start somewhere.
I’d suggest establishing and building an MVP (minimal viable product) when approaching new products and ideas. This streamlines a new endeavor by aligning internally on: what the goal of the MVP is, what will you measure, and who will you partner with to accomplish your goals (either internally or externally). This is an extremely important step in order to minimize scope creep and the overall risk of spending time, resources and money on something that is still just a hypothesis. More succinctly, an MVP allows a team to collect the maximum amount of validated learning about customers with the least amount of effort. Insurance organizations who want to sustain success through change need to become more comfortable with building product roadmaps and centering MVP success metrics on scientific findings and data rather than revenue, as is traditionally the case.
No one ever wants to live through what I call a “failed Field of Dreams scenario.” Just because you build a new product or implement an innovative strategy does not mean “they will come,” whether “they” be customers, revenue, or any other slew of positive results. Through a process of testing and calibrating, and leveraging the right partners and tools to do so, leaders can position their organizations for long term success.
So, if you are hoping to meet the changing needs and expectations of today’s modern insurance consumers, rather than initiating a goal to simply check it off the list of the things that you should do, make sure that testing and learning are part of your planning journey and that you are growing through experimentation. Do not just focus on ambiguous endpoints without defining success metrics along the way; be willing to adjust your plans based on findings in order to garner the desired results. It is a marathon not a sprint.
Adapt with APIs
No “new year” post would be complete without throwing in a few buzzwords for good measure, so I am going to be guilty of using some here myself. APIs are truly the way of the future in insurance. And to add to that, so are insurance ecosystems. But in order to benefit from the latter, insurance organizations need to be organized to leverage the former. Hesitancy to adopt APIs by insurance organizations only limits their own potential, and holds them back from facing change head on in the future.
I like to think about APIs as a way to connect the dots of the insurance value chain for consumers. There are two areas they impact the most: the insurance product itself and product distribution.
When it comes to informing insurance products, APIs can interject and extract real-time data to create more accurate and fair products. They can also create a service ecosystem, so that consumers are offered a more comprehensive and integrated experience. Utilizing APIs to inform products, claims, coverage, and other crucial business operations is critical to making well-informed, real time decisions and creating frictionless and omnichannel experiences.
Using APIs and the connected ecosystem will help you put the customer at the center of your business (as they should be), ultimately building customer trust and increasing overall retention. Furthermore, making your products and services available via an API will exponentially expand your distribution opportunities and in turn, immensely expand your business potential.
Additionally, APIs and the ecosystem have a huge impact on other business opportunities. Let’s throw one more buzzword into the mix, why don’t we… ever heard of “embedded insurance”? Right now, it seems to be the holy grail of the insurance space.
Embedded insurance is a tactic for generating a very relevant offer at the most opportune time for a customer (think of offering home insurance coverage during the home mortgage customer journey or auto insurance as part of buying a car). It’s obvious how this tactic can lead to high conversions at lower acquisition costs. Well, embedded insurance is only made possible through APIs. Ultimately, APIs are making the entire insurance lifecycle easier for consumers to interact with, while driving growth and efficiency for the insurance players who are using them effectively.
Getting further with partnerships
When looking at my own business plans, I often keep in mind the sentiment, “I am not looking for a different idea, I am looking for a better one.” In order to keep up with the pace of change in our industry, it’s not always about pivoting your whole strategy to meet an objective. It is about adding value to and expanding upon what you are already doing, and working to improve upon it, not upend it.
Now, more than ever, the market is flooded with tech solutions and services, which means every company is continually asking themselves: “build, buy, or partner?” Going back to my thoughts on generating an MVP, before making a massive capital investment in something that may or may not work, it just makes sense to test and learn through strategic partnerships.
In my experience, there is nothing wrong with a little “coopetition” when both companies are benefiting from the opportunities they build together. Collaboration among complementary organizations benefits customers by filling experience gaps and providing them with better, more streamlined services. Strategic partnerships are critical to creating holistic solutions that quickly achieve what’s best for both your customer and your business and help you leverage the right resources to address and overcome change.
Trends are temporary, agility is forever
No matter what year it is, there will always be lists of buzzwords and trends that will have an impact on the industry. And of course, insurance leaders should use these to their advantage by becoming familiar with them and employing them to inform decisions and strategies. But when all is said and done, how you prepare for and execute upon change will determine your success. The insurance organizations that continue to meet their customers where they are by using the latest technology and leveraging the most advantageous relationships are those that will always be prepared for whatever’s next, whether it’s in 2022 or beyond.