6/4/2023 0 Comments Next insurance![]() ![]() ![]() That said, the best ecosystems and InsurTech innovations in the world aren’t going to help you if they don’t align with your strategy or if you’re not executing your strategy properly. Although most of these kinds of investments aren’t game-changers on their own, when they get the acquiring company closer to a strategic goal, they’re worth it. They take part in ecosystems and invest in InsurTech. In fact, partnerships and deals have become a necessity for most carriers to enable their chosen ways to play. Inorganic strategies have a long history in the industry but have picked up steam recently as carriers focus on core competencies and enhancing technology. Get involved in partnerships and make deals to meet strategic goals. Get involved in partnerships and make deals For example, early movers are designing products that take into account two increasingly important issues: Stakeholders’ environmental, social and governance (ESG) concerns and the still overlooked employer as distributor market for a wide variety of financial and service needs, particularly retirement and college savings and paying for childcare or elder care. They’re able to identify new product categories (as opposed to just adding new features) and have the brand strength to deliver them. Of note, they’re typically able to make these investments because they’ve implemented structural, financial and tax approaches that minimize their cost ratios. They don’t shortchange big bets or dilute key investments with allocations to less vital areas. Committing to a way to play, then continuing to do everything you did before while funding whatever else comes along, is not a strategic direction. ![]() Simply setting financial goals isn’t enough. In particular, they: Say “no” to what doesn’t fitĭefine a strategic direction and say “no” to what doesn’t fit. Companies that continue to work from three- to five-year timelines that are vague and lack strategic focus are likely to lose market share and perhaps even wind up as someone else’s acquisition.īased on our experience working with all segments of the industry, we’ve observed that most successful insurers in today’s environment have a few key traits. Private equity, asset managers and other new entrants are moving quickly, with great focus and discipline, to capitalize on industry disruption. While carriers may have been able to get away with a fuzzier approach in the past, that is not the case today. In other words, commitment without action won’t get you very far. We tell clients that they need to fully fund and support their way to play and hold themselves accountable for the results. Unfortunately, while most insurers do try to focus on their strengths, they also typically underinvest in these areas and fail to act with urgency, resulting in a race to the middle. There’s room in most market segments for multiple players, but because not all competitive levers are fully or equally available to everyone, insurers typically focus on one of the following five areas: 1 - digitization, data and integration 2 - brand and distribution 3 - superior, innovative products 4- strategic partnerships 5 - effective structuring. Even though the pandemic has ebbed and flowed, the pace of change has remained relentless.ĭespite disruption and the new entrants trying to take advantage of it, the good news for many carriers is that they still have a competitive advantage that others can’t easily replicate. This has put immense pressure on the industry and carriers have had to adjust practically-in some cases, literally-overnight. Customer and employee expectations changed more in 18 months than they did in the previous two decades. Incremental change or hoping to avoid change altogether are no longer viable options.Ĭompounding the difficulty of addressing these challenges is how the COVID-19 pandemic accelerated them. As a result, industry executives now have to make an array of deliberate and aggressive strategic choices to succeed. All the while, technology has continued its relentless advance and an emerging player ecosystem is threatening to shake up customer acquisition. ![]() Growth without sacrificing profitability is challenging, climate change is irrevocably impacting certain risk profiles, distribution needs have become truly omnichannel and customers expect products tailored just for them. The business of insurance, which once was stable and predictable, isn’t that way anymore. The insurance industry is no longer predictable ![]()
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