This article was originally published in Carly’s monthly column in AM Best Review in December 2017.
Looking back on 2017, a Jack Welch quote comes to mind: “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”
This year saw many changes that affected the insurance industry: carriers and/or managing general agents built by insurtech firms, more experimentation with autonomous vehicles, a strong push to privatize flood insurance, new threats in the cyber realm, and the expansion of the sharing economy. It’s easy to reflect on these events with Welch’s words echoing in your head and feel concerned about the industry’s ability to keep up. We can focus on the challenge of legacy systems and the perceived bureaucracy of large carriers. But if you step back for a minute and consider what the industry is actively doing, I would still bet on our success. The following are examples of the industry’s attempts to keep up or outpace change.
Innovation centers: Many carriers have developed departments that are future focused. They are contemplating changes in the marketplace that will affect their business and developing services and products that are complementary to their existing models.
Reorganizations and realignments: Everywhere you look, carriers are realigning to focus on their customers. Whether this means creating more specialized teams or merging departments that have historically been separate, the end goal is to provide better service. Carriers and agencies making these changes are responding to the needs of the end user in ways that seem intentional and purposeful.
Partnering with insurtech firms: Carriers and agencies are more open than they have been in the past to use the expertise of insurtech firms to solve legacy issues with technological advances that may have been leveraged outside of our industry for years. Many of the innovation centers that I mentioned explore partnerships with these types of firms. The use of data and especially visualized data in the underwriting space from firms like DataCubes and Intellect SEEC are particularly encouraging.
These steps are the beginning of the adaptation to the 21st-century world. To succeed, each of us must work toward understanding the pace of change and potentially outpacing it in places that make sense. The slogan—“If you see something, say something”—should be adapted in all underwriting and customer-focused organizations. Our success will depend on our ability to identify and adapt to trends that are coming down the line. Can we get ahead of some of them instead of being reactive? We should all be thinking about the impact of automation and artificial intelligence on the workforce of the future. If we want to develop products that are valuable, we must think about how cyber risk will evolve before it happens. Finally, we should consider what services would complement traditional products, as diversification seems increasingly necessary in the workers’ compensation and auto insurance lines.
I am confident that each of us can respond to the new marketplace and bring ideas, innovation, and creativity to our industry even though the general public may view us as stodgy and behind the times. The people I know and communicate regularly with give me confidence that we are equipped to tackle everything 2018 and beyond brings our way.