(A note from Jim: I wrote this post in 2009. It’s getting an extensive number of hits now, in 2015. I was right on some of these trends, but perhaps too soon on some of the rest?)
Back in January of this year, I was invited to address a meeting of insurance executives on behalf of a global consulting company. It was a small but powerful group; in the room were Chief Operating Officers and Chief Information Officers for some of the world’s largest property and casualty insurance companies. (The client that booked me prefers to remain anonymous.)
I was asked to provide my views on the challenges and opportunities that the property & casualty insurance industry might face in 2015. These included a number of issues:
- unavailability of niche skills due to increased underwriting complexity. Quite simply, faster change and faster science is leading to unique issues in assessing insurance risk, with the result that skills become far more specialized and unique.
- the likely emergence of “social financial widgets” – this is the focus of an upcoming column for one of the publications I write for. Take a look at BestBuy’s Remix project, which allows developers to write code that interacts with the online catalog of BestBuy. Extend that thinking to the insurance in the future: the next generation insurance agent will write their own widgets that allow for the quoting, sale and binding coverage of a policy, within their own social-Website page.
- the implications of pervasive connectivity upon the insurance marketplace. We’re entering the era of smart highway infrastructure, and automobiles that increasingly take over responsibility for navigation. What happens with insurance risk as this occurs?
- the impact of computational analytics on risk assessment ; quite simply, we’re witnessing the emergence of highly sophisticated analytical programs that can undertake entirely new ways of assessing claims fraud.
- the impact of location intelligence and the re-engineering of the underwriting process. I often tell the story of how how some leading edge insurance executives realize that there is an opportunity to link spatial, i.e. Google Maps information, to public databases on crime, education, accidents, health care, income and other factors, in order to come up with new ways of assessing insurance risk.
- velocity of brand relevance: any brand today, including insurance products, must be seen to be fresh, up to date, and with the times. The next generation of customer are going to demand insurance products that are interactive, constantly changing to meet new needs, and which keep up to date with fast social and technological change.
We had a wide ranging discussion about opportunities for innovation in the industry, and explored a variety of ideas for distribution channel, underwriting, claims and product innovation. All in all, it was a wonderful event with a lot of unique insight.
Right now, of course, most insurance companies are in a “lock down” mode as they navigate the global recession : but savvy insurance executives know that they need to be planning for these and other key trends soon.