Mark Lusted, MD at Dock9

Throughout time, large empires have risen to great heights. Seemingly unmovable for centuries, but then falling from grace and consigned to encyclopedia entries and history books for ever.

Such empires have not just been associated with geographical regions such as the Romans and Ottomans. They have existed on a corporate level – where firms such as Nokia, Kodak and more recently Yahoo! Have ruled, and then crumbled, mainly thanks to lack of foresight and a refusal to innovate.

Mark Lusted
Mark Lusted

In today’s fast moving, technology-driven world, it’s not just behemoth organisations that are at risk. Entire industries need to pull together and look at new ways to keep up with a demanding and increasingly tech savvy audience.

When it comes to insurance, I have noticed a definite change in attitude amongst many in the industry over the past twelve months. Investments in new technology, innovation labs, rapid prototyping and user testing, as well as an adoption of agile practices are on the up amongst the most switched-on.

Despite this, much of the sector is stuck in its ways – strong on tradition and ways of operating -particularly when it comes to innovation. For years this didn’t matter, but in the start-up era, there are an increasing number of fleet-footed InsurTech startups changing the way consumers and businesses alike, look for protection.

With Consumer Intelligences latest survey reporting that “consumer trust and confidence in insurance brands is at an all-time low”[1] there are clearly opportunities for new entrants who have the advantage of a fresh slate to build their technology. These businesses are leveraging data automation, connected devices, personalisation and increasingly artificial intelligence to deliver simpler and smarter user experiences.

Crucially, the most innovative are challenging the notion that the engagement with a customer after purchase should only be at claim, adjustment or renewal. Could meaningful on-going customer engagement be the solution to the commoditisation of insurance in the age of the aggregator, and create happy, loyal customers?

Digital Darwinism

While many insurance companies may dismiss these ideas out of hand, comfortable that their line of business or specific niche is safe from disruption, this is a risky attitude to take.

They should look to a fallen behemoth in the form of Kodak for evidence of how such complacency can come back to bite them. Failing to acknowledge the rise of the smartphone, Kodak focused on legacy technology – pushing out handheld cameras to an audience that simply wanted a more convenient solution.

Insurers cannot afford to go down this route.

Constant innovation is needed to make money, with which businesses can invest in their company to spur its growth. Insurers need to be aligned with their target market, which itself is likely to be seeing generational shifts in behaviour and give them what they want in the form of slick, easy to use digital solutions.

Systems strain

Many insurers think that doing this will mean overhauling their legacy IT systems. It’s like the loft in your house – a potential new space that can be converted into a spare room, or office – but the hassle of cleaning it out is too much to bear, meaning it’s left as is and excuses are made.

The complexities of the insurance sector’s legacy systems can be baffling. The problem is, once norms have been set, it’s difficult to break out of them. With a history of mergers and acquisitions, it’s far from uncommon in our experience to find a multitude of independent legacy systems, often supported by a limited group of individuals with a reluctance to change.

However, insurers need to understand the damage using the excuse of legacy systems is causing their businesses, by hampering their advancement in an increasingly competitive market.

Moving away from existing systems is particularly undesirable if you’re a business that wants to quickly address the problem and move on; the thought of a multi-year system procurement and implementation project causes sleepless nights. There is also the danger that a ‘rip and repair project will fail.

So how can you stay innovative without spending a fortune?

The truth is that delivering modern user experiences in most cases does not require a core-system change. Rather than a full system overhaul, businesses can build middleware layers that interact between their systems and the front-end, allowing you a way to work around the incumbent technology and still provide customers with the best experience.

The level of complexity of the middleware developed will depend on the product, number of systems to be integrated with and amount of self-service touchpoints offered. But in most cases, this is far simpler and more cost-effective than a system change.

This can help incumbent insurers stop legacy systems acting as an obstacle in the way of exceptional user experience – which customers now expect as the bare minimum.

Of course, it’s not just about the technology. As with the great empires of the past, a shift in mindset is required from today’s corporate rulers – across the C-suite. This is because truly delivering transformation requires an absolute culture and process shift – right across the industry.

There simply has to be an understanding that the old way of doing things is no longer the right way. What worked in insurance over the last century, and indeed the last five years, no longer applies and more than likely what is status quo today won’t fit the bill in two years’ time, let alone a decade from now.

The insurance sector is facing a critical time. Now is the time to take an in-depth look at how they operate. They must ensure they take ownership for the complete, end-to-end user experience they provide.

Rapid prototyping and testing with real customers must be carried out continuously in order to deliver new features constantly.  Above all, they must make sure innovation sits at their core, to attract a new generation of customers.

Just because empires have fallen in the past, it doesn’t mean they need to fall again. Big insurance organisations must ensure they move with the times. In doing so they will remain rock solid and in touch with their audience for years to come.


Related Articles