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Consumer Insight, Experimentation and Other Winning Strategies for the Insurance Disruption Game

By Louise Billmeyer, VP & CIO, Principal Financial Group


Louise Billmeyer, VP & CIO, Principal Financial Group

When you hear the word insurance in a business context, what comes to mind? Complex products? Slowness-to-change? An important, if not enthralling, topic? They’re all fair responses. After all, we’retalking about an industry that manages risk as a business and has a long history of focusing on the product and channeling IT investmentlargely intoproduct support.

But major changes are a foot. For the retail and group life, disability and specialty/ancillary benefits (e.g., dental, vision) businesses, marked shift in consumer demographics and behaviors is transforming not only the types of protection products people are interested in buying but the way they want to be informed about and engaged in making insurance decisions. Notably:

  • Life insurance sales are down industry-wide.
  • Consumers are generallyconfused about worksite insurance offerings. They sometimeswonder: “What does my employer offer, what’savailable to me on a voluntary basis, and how do these offerings really work?”
  • Consumers want a quicker and easier way to purchase products, anytime, anywhere.

The upshot is that a business segment that’s been relatively free from disruption is fast becoming a hot-bed of opportunity for it. This includes disruption by established insurance companies seeking to capitalize on the direction the industry is going by employing business and technology innovation to transform their own products and services. However, the insurance business has also become attractive—sexy even!—to entrepreneurs and capital investors, and insurance technology start-ups are cropping up all over the place.

“The insurance business has also become attractive to entrepreneurs and capital investors, and insurance technology start-ups are cropping up all over the place.”

Becoming an Insurance Industry Innovator

Given the current climate, the question becomes, if you’re in the insurance business, how do you get in – and win–the disruption game?

The good news is that many foundational technologies and development practices are readily available for consumption that can help you launch your innovation journey. Taking advantage of digital technologies like data analytics, mobile, internet of things, and cognitive computing will jumpstart virtually any company’s innovative practices; however, to a significant extent, your organization’s ultimate success at the disruption gameis contingent on its ability to cultivate an environment in which innovation can flourish. Keys to accomplishing this are:

Understanding the insurance business and the insurance consumer:

  • What does the consumer value?
  • What expectations does the consumer bring when making decisions about insurance?
  • What are consumer behaviors when it comes to making insurance decisions?
    Infusing agility into your business and IT organization. How good is your organization at:
  • Experimenting with a new idea?
  • Starting small with value?
  • Failing early and fast (taking some risk in a lab environment), and being okay with it?

If your company has yet to move in one or both of the directions above, you can hasten its progress by engaging:

  • Third party data and analytics providers to gain insight into the way insurance consumers think and how they make product decisions.
  • Agile practitioners to begin transforming the way your organization thinks and works.

This isn’t to say that shifting your business environment in the ways above is something that occurs overnight. Maturing your organization’s use of analytics and upping its agility quotient require a true cultural shift and, if you’re in the beginning stages of making these changes, it will be sometime before you’ll be able to realize their full benefits.

Identify Business Transformation Targets

When your organization is prepared to support innovation, the next step is to identify targets for disruption. One approach is to focus on an internal business capability or process that’s complex and time intensive, like underwriting management, and explore the possibilities:

  • Are there opportunities to improve how a service is offered that will enable you to respond to the consumer faster while still appropriately managing risk?
  • Do these opportunities make it possible to deliver business value to the consumer, such as lowering premium rates?
  • Are there technology solutions for enabling these opportunities that will improve consumer engagement and enhance the user experience?

Ready, Set, Experiment

Once you’ve identified an area of focus, such as a service or process, to target for transformation, exploiting thefull range of available resources will be critical to your success. This includes:

  • Using data analytics to characterize specific customer behaviors and attitudes.
  • Employing user/customer experience tooling and practices.
  • Using agile practices to:
    • Create an experimentation lab within your own organization for testing ideas.
    • Approach development and testing in small, fast increments.
    • Suspend traditional application development policies and processes while experimenting to enable creativity to flow freely.
  • Taking advantage of third party ecosystems, cloud offerings, insurance technology start-ups, crowd-sourced idea generation, hackathons, etc,. to quickly shape and prototype an idea.

The key is, once you’ve shifted your organization’s culture and established an environment that supports innovation, winning at the insurance industry disruption game requiresa combination of commitment to understanding your consumer and a hearty appetite for fearless experimentation.

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