Much has been written about the need for insurers to embrace the opportunities that the wave of technology innovation has made possible over the past few years and to address the accompanying globalisation of ideas and propositions that make local markets increasingly less distinctive.
In the UK we rightly take pride in the fact that our ‘local’ propositions have played a significant role in the global development of what we now commonly call ‘Insurance’, but is that all about to change?
Fintech and Instech innovation is still a bustling activity in London and around our university towns but is its message getting out to the global market in the same way that traditional Insurance products did – via insurers, brokers and trade?
I suspect that many innovators find the gleaming buildings of the Square Mile and Canary Wharf daunting and inaccessible and that conversely the occupants of these offices find it hard to ‘engage’ with the ‘garage’ community.
Not only do these two communities come from, on the whole, very different perspectives but they are also constrained by their own experiences, ask an innovator how long it takes to get to speak to the right person and ask an Insurance Executive how long it takes to get ‘things done’.
Part of the problem is in technology itself, I was speaking to an Insurance Company CEO last month and he lamented the fact that a project that was intended to increase the agility of his business has in fact increased the number of people he now has in the affected function with no, as yet, tangible benefit – this despite that fact that his business has invested in the latest ‘traditional’ insurance systems.
I was also speaking to an Instech founder who recognised that Insurers would want his technology to be ‘proven’ before it could be considered as a viable option for change, largely because the time and cost to implement even a proof of concept that required a degree of interaction with existing systems is too high.
It occurs to me that this challenge is not dissimilar to that faced by any other long established industry’s technology landscape and that without a large external impetus – or a revolutionary entrepreneur – nothing really changes until the industry in question finds itself missing its targets.
Two example industries spring to mind; Amazon in the retail sector driven by an entrepreneur, and the ‘CMA 9’ UK retail banks driven by regulation.
The key to enabling both to become more able to embrace innovation – or ‘Agility’ - is the execution of a technology strategy that is about making the business more granular in design and technology execution with the exposure of the business functionality to internal and external innovation partners in the form of open, standards based, API’s1 that enable the composition of new propositions to be quickly created and – most importantly – retired.
So could this operating model become the new definition of a ‘composite insurer’?
My recent dealings with two large players in the sector suggest that some are now rethinking their entire strategy in the next round of renewing the technology estate to becoming API centric in the recognition that propositions are becoming more technology rich and global in their nature and that agility rather than having the right answer all the time is actually what matters – maybe the UK could lead this new way of defining the insurance proposition, CGI has systems integration in its DNA and we are already supporting banks adopt this new way of doing business and look forward to helping insurers in the same way. If you would like to explore this idea in more detail and understand what we are doing in other sectors please do get in touch.