Enabling The Future of Insurance with One Thing – Flexibility

Enabling The Future of Insurance with One Thing – Flexibility

I was talking to the CEO of a Small Business-focused insurer about some announcements one of their competitors recently made around partnering with various SaaS platforms small businesses depend on for daily tasks like bookkeeping, HR or sales (e.g., Quickbooks, Gusto and Shopify). He was writing off the announcements as being mostly fluff, and unlikely to matter much to new business generation.

I think he may have been missing the point.

While these partnerships were likely to bring in new business through a mix of affinity marketing and embedded insurance solutions (which they have), what they are really about is data.

Essentially, what this carrier had done was create paths to learning about its exposures in real time from the tools those businesses use every day to operate. Suddenly, this carrier could tell how many employees the business has and who was working when, how much revenue they generated and from what products and services, where they were operating and how, etc. And they could know all of this at any point in time, not just at the point of new business or renewal, and not just if the insured told the carrier about it in their application.

He assured me he could do the same, and shared how his underwriters normally get spreadsheets and PDFs with all of that information, or they get it directly entered into their new business and renewal applications. He also noted how sometimes, they get updated or more accurate information during claims, and the underwriters can look at the claim file to see it, or it gets attached to the file for consideration at renewal.

What he didn’t understand was that none of this is actually data. He had information – static information that was getting appended to files – that people had to dig out, review and think about at fixed intervals (like once a year at renewal time). His competitor now had the ability to make live decisions proactively that could impact rate and coverage, or to intervene when signals from that data indicate a higher risk of claims. They could reach out to offer better or more appropriate coverage, potentially increasing premium or lowering it while increasing retention because their insurance program is more affordable for the insured, leaving them less likely to shop around. And no one had to think of doing this or remember to do it – the system could understand the signal and act accordingly, taking action or flagging it for an underwriter.

Where our conversation went is what lead his eyes to open to what was really going on. He wasn’t able to see the possibilities because he had no way to take that information in as data or tie it to actions. He lacked the flexibility to respond to the ways business is changing so that his business can change with it.

The inflexibility in his underlying systems meant he suffered from inflexibility in his strategic thinking. It’s not his fault, but clearly the constraint in their capabilities had far reaching and significant long-term implications.

How do we keep up with change?

When carriers ask me what the most important technology they should invest in is, I always answer with the same thing – flexibility. 

When we think about the future of risk, we can’t know so many of the variables that will be at play. We don’t know what businesses will be doing, how they’ll do it, and what tools they’ll depend on. We don’t know what cars people will drive, in what conditions, and what information those cars will be generating as they’re driven. We don’t know what choices individuals will make that impact their health and welfare, impacting their mortality and morbidity.

That is, while we know data is at the center of an insurers ability to not only predict risk, but prevent it, we don’t know what that data will be across risks and across time.

That means what we really need is not a specific analytics tool, modeling solution, or data warehouse or lake to make sense of it. We don’t need specific partnerships with specific sensor providers or SaaS solutions that can give us specific information we think is valuable right now.

We need optionality, and that takes having the flexibility in our underlying architecture to be able to respond as new solutions and sources of insight on risk present themselves. We need to create a business where we could partner with different companies and use that partnership for more than just new business leads while ensuring what we have access to from that partnership is more than just files we upload into a static risk record.

The question we can all ask ourselves is not what competitors are or aren’t doing, or what we think of that. Instead, ask yourself what kind of flexibility you have to seize new opportunities and respond to different ways of working and data streams than you’ve ever used before.

To take your thinking about flexibility further, be sure to watch the thoughts I shared at Microsoft Envision: US Financial Services, free, on demand.

Paul Stanley

CEO at 360GLOBALNET LTD

4mo

Good article Bryan Falchuk Flexibility is absolutely core to modern IT for the Insurance Industry but so very few organisations have systems that allow them to do what they want, how they want, when they want at minimal cost. We live in an age where technology already exists which is universally flexible itself - Sep forward totally no-code technology but critically built for Insurance not a jack of all trades genetic workflow platform which requires $humungous sums to bespoke. Once you have a platform of this nature you can add the word ubiquity to flexibility and then you are cooking on gas (or should that be renewables these days!) Not only can you do what you want, how you want and when, you can operate it across any Insurance discipline anywhere in the world and at a radically different price point.

Thanks Bryan Falchuk; flexibility- "We need optionality, and that takes having the flexibility in our underlying architecture to be able to respond as new solutions and sources of insight on risk present themselves." when adopting "point solutions" that make short-term sense there is a big danger that unless the carrier thinks about the potential flexibility it bakes in inflexibility. That leads to work-arounds, rarely documented, and lots of manual analysis to bridge the unconnected data and system silos. How flexible will this XXX platform or software be in the bigger and long-term is a good mantra to have front of mind. Just because it's cloud native, microservices, PI rich etc does not guarantee that but it usually helps especially when the technology company has flexibility in its culture and people

Patrick Kelahan

| Expert- Consultant| MC Consultants| 🐘Insurance Elephant🐘|Insurance Advocate

2y

Have to appreciate an article where the word ‘customer’ is found in many contexts. A+ work, Bryan Falchuk #innovationfromthecustomerbackwards

Ema Roloff

Digital Strategist | Keynote Speaker | Elevating Leadership in the Digital World

2y

I like that you used the term flexibility rather than agility. I think a lot of organizations hear, "we need to be agile" and think people are strictly thinking of a deployment methodology, which ultimately brings them back to technology and thinking solely about the platforms that will be needed to lead them to the future.

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