How to Recognize an Ambitious Insurer

by Rory Yates

Since its earliest days, insurers have built their businesses around products designed to help people, businesses, and societies do more by reducing the burden of risk.

Today an insurer can still win by offering good products. Tomorrow, however, insurers will only win by offering insurance experiences. Holistic experiences that include assistance, prevention and adjacent services, regular, meaningful communications, and personalized products, all delivered to the customer at the right time. These experiences won’t be driven by the cost of transaction volume but the intention to help people, businesses, and society do more by reducing the burden of risk.

This is decidedly different from striving to do more efficiently what you’ve always done. In a faster-moving and highly digitalized world, ambitious insurers are those people who will adapt to new and constantly changing technology, customer expectations, and risk, while embracing opportunities to continue to improve the insurance experience.

That desire – and that ability – are what differentiate ambitious insurers from the rest.

Thinking beyond process efficiencies

When I first began working in the field of insurance, I was full of hope. Through the application of technology, we were able to introduce enormous amounts of process and operational efficiency, and we were rewarded for that.

But I soon realized that these systems weren’t about facing the future, adapting the business model, establishing the ability to build new products and services at will, or expanding our premium share and entering new markets. It was purely about finding efficiencies and making cost savings. Sadly, insurers have continued to apply that efficiency mindset as they enter the experience economy.

Email is a good example. While it delivers a great way to offer hyper-personalization and increase customer engagement by linking to real-time data and other internet environments, for many in insurance it was just a low-cost alternative to print and mail. The same was true in the early days of online-quote-and-purchase. I should know. I’ve personally designed 100s of them because they were cheaper than call centers.

All that early IT work was about finding ways to make established processes run more efficiently, or worse: how to make insurance cheaper per policy or per customer. And it led to the commoditization of insurance, lousy customer experiences, and a doorway for new competitors.

Insurers just can’t continue looking to do the same old things more efficiently. That’s not ambition. That’s the definition of structural decline.

Barbarians at the gate

According to Gartner, insurers spent roughly $210 billion on IT in 2021. Compare that to the $15.8 billion invested in InsurTech companies in 2021, which is more than the amount invested in 2019 and 2020 combined, according to Gallagher Re’s “Global InsurTech Report.”

The intensity of this investment demonstrates institutional investors’ impatience with the insurance customer experience and insurers’ ability to maintain relevance in peoples’ lives.

For example, insurers are inclined to pat themselves on the back for launching a kiosk. But in doing so, they’ve made a one-time purchase marginally better for a handful of customers.

Insurers may make a quote system slightly better. But that, too, is no longer good enough. Basic expectations now include logging in with an app, accessing and changing policies, billing, and payment options, and downloading documents. But, again, even that demonstrates competence, not ambition.

Ambitious insurers need to start thinking past Amazon because the Amazon experience is now the norm.

Ambition is meeting customers where they are – online, on the move, and on their phones – and exceeding their expectations. The desire to do this is inside every insurer. They desperately want to offer app-type experiences because they’re consumers themselves, and their own expectations are defined by the Amazons and Apples of the world, not by other insurers.

But the efficiency mindset, legacy technology, and the point solutions they’ve acquired, some through half measures, are holding them back. Ambitious insurers need to try something different because that’s what disruptors – like those well-funded InsurTech and digital insurers, are bringing to the market.

Ambitious thinking

Love or hate him, Elon Musk is the most ambitious person in the world. He fixes real problems. His idea of landing and reusing rockets was a mindset shift. While others were looking to optimize the cost of rockets with less expensive materials, his competitors had the same rockets, and they were still too expensive.

That’s the same sort of uninspired thinking we’ve seen in insurance. In essence, all Insurers have done is made a bad experience more efficient. For example, claims are the heart of insurance success. That’s when the product becomes real, and it’s often the heart of customer retention. But insurers shouldn’t need to hire any more claims handlers.

Insurers should be reinventing claims so that they’re completely digitalized. So that they help mitigate losses, reach out to those in harm’s way, and identify fraud. Instead, they should be hiring claims automation experts who can shape the technology and create positive customer experiences, because that’s the kind of job that appeals to recent graduates. Not one where they sit in a call center repeating canned answers and getting hammered by customers.

That’s never been an attractive job, and it’s less so now. It goes without saying that customers are happiest when their claims are settled quickly, with maximum transparency and communication.

Realizing your insurance ambitions

Insurance is a hugely important sector. It’s never more important than when life has gone wrong, and it directly impacts people’s quality of life. And the experience is just maddening most of the time.

Ambitious insurers seek to break that cycle by anticipating change and creating value. Not by tweaking the cost of transaction volume. Making the wrong things more efficient is a road to nowhere.

I passionately believe that insurance is an industry with a heart. I don’t know anyone in the industry that ultimately isn’t a decent person. But honestly, your old technology gets in the way. It creates this endemic problem in which everybody considers change – because of the limitations of their technology – to be a massive slog.

But it doesn’t have to be that way. Instead, becoming an ambitious insurer is about getting back to the industry’s roots: helping people, businesses, and society do more by reducing the burden of risk. And ambitious insurers won’t let their legacy technology stand in the way. And by the way, you can now finally have your efficiency gained in operations and in change – you can literally have your cake and eat it!

Rory Yates has more than 24 years of business leadership experience spanning client, agency, consultancy, start-up, and private equity roles. As EIS’ head of strategy, Rory helps insurers achieve their transformation goals and evolve toward ecosystem-based futures via insurance core systems transformation, including truly personalized engagement, taking innovation from concept to market quickly, and growing efficiently.