pwc-top-issues

The insurance professionals at PWC sure got some things correct in their March 2016 Top Issues InsurTech: A Golden Opportunity for Insurers to Innovate.

The opening introductory line of PWC’s report was the best one:

The insurance industry has remained much the same for more than 100 years…

The reason the industry has not changed for more than 100 years is because the industry is designed that way – no change is good change – when you are on top.  When you are winning, when you are dominating, when you are on top, why change? Ever notice what corporate brands are on top of the largest buildings in your city? Who is sponsoring the biggest golf tournaments? What logo is on the stadium? These are just a few of the examples of how you can recognize just how prolific the incumbent insurance industry really is.  Did you know that ~75% of all households own life insurance – which is down from ~85% (to which the industry call a crisis).  But as PWC points out, who stays on top in the life insurance industry is about to to change, big time, for the first time, maybe ever (remember when there were yellow cabs).  Why is this change going to happen:

  • Consumers Expectations – Consumers are expecting it and want it.
  • Pace of Innovation is Picking Up – Technology allowing for radical changes in the business model has arrived.
  • Startups – Are hungry and coming with scaled, cloud based infrastructure tools that enable them to compete.

As PWC accurately states:

Incumbent insurers have been able to slide by with incremental improvements. New entrants are demonstrating that approach isn’t enough anymore.

Change in the life insurance industry (that is an oxymoron) is about to get interesting and we intend to be a permanent fixture in the future landscape of the industry.  In the graphic below developed by PWC, we see a variety of ways in which innovation will change the landscape of the industry.
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We are going to the heart of the industry and intend to work from the ground up, to bring dramatically improved products and services that address customer needs in the modern-day market and business environment by focusing on:

  • Meeting Changing Customer Needs with New Offerings.  We have been doing that now for over ten years in our insurance business.  Can our current business model provide any further evidence to our commitment to deliver on this promise. We are now going to grow up, and enter the insurance business in a much more robust manner, becoming part of the club, rather than an awkward outsider.
  • Augment Existing Capabilities and Reach with Strategic Relationships.  We intend to work with numerous incumbent insurance industry players who are like-minded and want to implement real change in the products and services offered, and the delivery thereof.
  •  Leverage Existing Data & Utilize New Approaches to Underwrite Risk and Predict Loss.  Here is where we plan to make the greatest strides.  In the PWC report, they specifically talk about genomic underwriting approaches.  We will make sure the authors are fully aware of our new-found capabilities.
  • Enabled with Sophisticated Operational Capabilities.  We have no legacy systems or practices to hold us back. We intend to work with best technology to create the most efficient processes ever designed for the industry.

Great job to the PWC team to getting this report together.  Next time, hopefully they will mention our advanced technology and plans for the industry!