Business Disruption is not new, but, simultaneous disruption in different walks of life and across businesses is the new phenomenon that global businesses are trying to position as an opportunity, challenge, or a threat. With never like before technology led la-uber disruptions surfacing in different industries, business needs to develop a deeper understanding of the underlying factors to come with an effective strategy to survive a possible deluge, if not to differentiate and stand apart. This applies more to industries where sporadic disruptions are surfacing but failing to make a remarkable impact. Insurance is one such industry. I think the insurance industry is poised for a very exciting but challenging phase in coming years.
The industry is witnessing some key paradigm shifts. For example, life insurers who mastered risk of death for centuries are trying to understand the emerging risk of over-living and outliving. Auto insurers who priced and sold insurance for a century based on the assumption that all wo/men drive same, are now educating customers that no two individuals drive same and they deserve to be rated according to their driving skills. These are a few illustrative examples of the paradigm shift the industry is undergoing. While the shift is consequential in nature, causing factors are both internal as well as external in nature where insurers have control to some extent.
Some key external factors insurers need to note to identify best opportunities to begin their internal transformation.
- For long, businesses have offered generalized products and services at scale and customized products as premium on-demand services. Now, businesses find a possibility in Big Data analytics to offer customization at a scale where at factory-level customization can be handled
- While businesses are still struggling to fully transform into centric business modes, customers are moving to the center of a new disruptive revolution. The sharing economy model is shaping up through peer-to-peer exchange of goods and services, besides valuable information powered by technology platforms
- While on one hand, the physical efforts to attract customers and showcase offerings are underway, on the other side customers themselves are frenetically searching for offerings that can meet their value needs from anywhere and at any time
- The emergence of google as a single largest layer between individual and rest of the world in the online space, which now has all capabilities to know more about your customers and their preferences than what you know.
In the next series, let us examine some of the key challenges and opportunities besides sporadic disruptions in the insurance industry. We can also see how insurers are coping with the major departures above.