There is hardly an insurer out there today who does not have an innovation team looking at new and emerging technologies: blockchain, the Internet of Things (IoT) and machine learning top the list.
Many insurers have dedicated teams for each of these areas. And yet, some are becoming disillusioned. They’re beginning to wonder whether there’s too much hype surrounding emerging technologies. They’re growing skeptical about technology’s actual impact.
When you consider a toolbox, you may see several interesting options. But some tools will be impractical for the task at hand.
Insurers should think about technology in much the same way.
If technology were magic and could do anything, ask yourself: What business model or innovation would you build? The biggest pitfall with innovation projects is that they begin by asking: What can this technology do for my business? rather than asking, How should I innovate my business, and how can technology help?
Implementing technology for the sake of technology usually ends in mediocre results.
The shift in insurance from product-centric to customer-centric business models has placed an increased emphasis on advanced technology. As insurance companies compete, the race to keep pace with competitors and digital transformation often results in rushed technology implementation.
It’s essential that the insurance sector understand how new technologies can support overall business objectives. In order to be successful, organizations have to forget about “being left behind” and look toward achieving their best business outcomes. By first determining company goals, insurers can subsequently add technology as an effective tool to achieve those goals.
What’s at stake
If companies aren’t strategic about implementing new technologies, they risk lost investments in time, could miss out on key windows of opportunities, or witness a decline in profitability. This is a reality for many insurance companies. Then, those that aren’t first to market often try to emulate market leaders by developing innovation labs and investing copious resources upfront before stopping to think about what business goals they are trying to achieve. This rush to innovate can outweigh other business considerations — including profitability.
Insurers should look at the ways competitors and other industries are implementing technology.
Consider Discovery, a South Africa-based insurance and financial services group. This company developed a Vitality wellness program that encourages, facilitates and rewards customers for healthy lifestyle choices. The company uses modern technologies to support the program.
Discovery realized that by tying healthy living to such perks as discounted gym memberships, cash-back rewards and air miles, the company was able to increase customer retention by addressing a common goal: staying healthy.
The program has seen tremendous success: Discovery’s customer data shows that engaged Vitality members exercise 25 percent more than non-Vitality members, and their food purchases are 9 percent healthier.
Discovery was able to develop Vitality quickly to meet market demand, and it also enjoys the greatest market share for this offering. The service gained industry-wide recognition, and leading companies worldwide such as John Hancock, AIA, Generali and Prudential are franchising the Vitality model.
Choosing the right technology
Insurers should only bring advanced technology to the table once business objectives are established and an ideal customer scenario and product is defined. Tech experts know the benefits of new technology, but it’s often the non-experts who can highlight specific challenges that need to be negotiated in order to create optimal customer scenarios. Non-experts bring a great deal of value with their fresh perspectives on technologies and how they can be used within the organization.
Today, technology can do just about anything we want. The key is getting companies to think about business outcome first, and technology second. Far too often insurers learn about a solution and try to apply it to their current business to help increase efficiencies. Then they stop there. When they fall into this common pitfall of thinking about technology before business objectives, insurers will face lost time, missed opportunities and poor results.
Companies that avoid this pitfall will benefit from early success in new technology deployments.
Originally published on PropertyCasualty360. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.