Preparing for the Future of Insurance
A host of industry-wide changes threaten domestic insurance agencies — first among these is the rapid growth of the IT industry. To make it through with their companies intact, insurance leaders need to implement 21st century systems and processes.
The insurance industry has come a long way from the days of localized solutions for local needs in local markets. Today, the sector is far from static: overseas competition in emerging markets, environmental change and its associated risks, and generational shifts are all combining to force growth and evolution from the insurance industry.
These changes have already begun to decrease the market share of traditional insurance outfits and will likely continue to do so — for example, from 2010 to 2013, the London Market’s business share in emerging markets decreased by over 20%. While the status of traditional players in the industry may protect them from some 21st century turbulence, there is one development that companies need to embrace or risk falling behind: the rise of IT in business.
TrustMarque reports that “many global insurance companies are operating as nimble IT companies that sell insurance” — if domestic insurers don’t do the same, they simple won’t be able to compete. That being said, adopting brand new IT infrastructure and processes isn’t easy for many companies. Much like healthcare, insurance is a heavily regulated industry, which makes data-driven solutions more difficult to implement. In addition, many insurance agents are stuck with inflexible legacy technology and paper-based processes.
These difficulties shouldn’t prevent insurance agencies from adapting to an IT-centric world — rather, they should motivate companies to do so before it’s too late. We’ve identified two simple goals for companies looking to their IT operations, along with a few simple ways to achieve them.
The piecemeal adoption of new tech developments has led to a situation where sales staff and executives have little to no communication with IT staff. This can quickly lead to your company falling behind the competition — as a Towers Watson study recently found, companies with highly effective communication report 47% higher total returns to shareholders than those companies that communicate less effectively.
There are several ways that insurance agencies can smoothly integrate growing IT departments into their business. One option is implementing a tech-oriented development and deployment methodology such as DevOps, Lean, or Agile. These toolkits are ideally designed to bring together multiple departments into a fluid whole — in particular, DevOps should be scaled across an entire operation.
Insurance agencies should also invest in business value dashboards (BVDs) like Vityl Dashboard. BVD’s transform IT technical metrics into business-centric views in order for them to assist you in your transition to organizational maturity. For insurance agencies looking to take a first step toward IT and business alignment, BVDs are the way to go.
The insurance industry is a heavily regulated one, and recent watermark legislation like Solvency II is raising the standards for compliance. To work within these regulations in the digital age, proper data management and access is crucial. Increasing data transparency has the added benefits of improving customer service and allowing underwriters to more easily derive accurate prices for policyholders.
Transitioning to a cloud-based IT infrastructure can help to improve data access, but it likely isn’t enough. As we’ve mentioned before, cloud providers can be frustratingly opaque — even Amazon Web Services has repeatedly failed to provide adequate information to their users.
To ensure that their data is as accessible as possible, insurance agencies need to take matters into their own hands by investing in infrastructure monitoring and performance analytics software. We recommend our TeamQuest Surveyor and Vityl Monitor products — both provide clear metrics and data on your company’s operations.
Recent changes across the insurance industry have created turbulence for many domestic companies, but by following our advice, they can ensure continued success — no matter what the 21st century throws their way.