State of Insurance: Ready for Disruption, Agile Thinking

This post is part of a series in which LinkedIn Influencers analyze the state and future of their industry. Read all the posts here.

It’s hard to pick up a paper without reading about the Affordable Care Act (Obamacare). This ground breaking legislation is having a major impact on many industries — including insurance and financial services. While Obamacare is the most visible issue right now, it is not the only pressure facing the industry.

Changing demographics, new models for the sale and distribution of insurance products, the trend toward self-marketing via the Internet, new communication tools, the concern of protecting private client data against a data breach — are all issues facing insurance companies, insurance agents, and their technology vendors.

These changes are — or should I say, should be — forcing a conservative and slow-to-change industry to adapt faster or face significant disruption of existing business models. It’s not easy.

In June of 2013 a group of industry consultants (including myself) met for the sole purpose of outlining what we as a group felt was required of the insurance industry to position themselves to lead the change.

Is any progress being made? It depends.

Vertafore (an insurance technology vendor) recently hosted an industry meeting for their insurance company partners. They introduced new technology that helps property and casualty insurance agents streamline the premium quoting process. During an afternoon panel discussion, the representative from a smaller regional insurance company said their 2014 budget was fixed and they would not be able to even consider integrating this technology into their rating systems until late 2015 which would mean a roll-out to their agents in 2016.

In today’s rapid development environment, waiting 18 to 24 months to deploy technology improvements is unacceptable. This type of legacy thinking is a symptom of a deeper issue.

On the other hand, Vertafore’s new President and CEO Alex Lintner announced at their user group conference before almost 4,000 of their customers his commitment to providing the resources necessary to deliver "significant upgrades" to their products each and every quarter. This is a step in the right direction. Getting new tools into the hands of agency staff faster than in the past will help them keep up with the ever changing consumer.

And therein lies the problem.

For the industry to be able to respond quickly to the consumer, three segments of the industry must do a better job of working together.

• Insurance companies must create new and innovative products and services, and provide the latest in technology tools to streamline all areas of operations including paying the claim when disaster strikes.
• Insurance agents create relationships with consumers. They need tools to be visible to their clients on any platform that comes along. Agents need better tools that allow them to evaluate their clients' needs and provide the best protection at a competitive price.
• And the insurance industry technology vendors should improve their platforms more rapidly to provide agents and their carriers with the information to provide proactive service to their clients.

These three players make the industry work. They all need to put aside self-interest and work together faster.

The insurance industry is ripe for disruption. Others see opportunity where many within only see problems and have many reasons and excuses why it can’t be done.

Innovation is at the core of what needs to change. I shared my thoughts on how the industry needs to innovate in my previous article 2014 Big Idea: Insurance Needs To Catch Up With the Times.

So is the insurance industry going to follow in the footsteps of the music business (think iTunes), the publishing business (think Amazon), the film business (think Kodak), or the entertainment business (think Netflix)? Are insurance agents and the carriers they represent going to wake up one day and find they have not adapted fast enough and have allowed others to take away their business?

Yet, the insurance industry serves a vital function in our society. For hundreds of years insurance has helped make people whole after a disaster. It is an unbelievable industry that has helped those willing to work hard to achieve both personal and financial rewards. There are great income opportunities, better work/life balance than most other professions, the ability to work with diverse and interesting business owners, and the potential to make a significant impact on the lives of individuals and businesses.

The unacceptable response is to stick your head in the sand and pretend everything is going to be okay. If you don’t like the current state of the industry, become part of the solution. Create a plan for moving forward. Help begin the process of changing legacy thinking into agile thinking. Look for the opportunities and ways you can help overcome the problems.

What do you think: is the insurance industry doomed? Or do you see bright spots that change is happening? Leave your comments below.

Photo: Nikolai Sorokin | Dreamstime.com

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Enjoyed this post? Read what other Influencers had to say:
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• Sallie Krawcheck on the State of Banking: Not Awful, Not Great, Just 'Meh'