October 28, 2020
TABLE OF CONTENTS
In this brand new series from Levvel, our industry experts discuss what the future of insurance looks like, how insurers are leveraging emerging technologies, and what steps established insurers can take now to prepare for the future. We’ll share relevant stories from the field and how we’ve helped national insurers overcome their biggest challenges.
As Insurtech startups rapidly claim their stake in market share, insurance giants are feeling the pressure to modernize and innovate. This report highlights the symptoms of outdated legacy systems for insurance organizations, and offers vital business solutions and strategies on legacy modernization to improve business success.
David Antoline: So the future of insurance is probably not as different as a lot of people are either hoping for or expecting, and we don’t necessarily view that as a bad thing. I think that in a lot of cases, the movement is well on its way towards what a lot of people are considering to be the future. And in a lot of ways, what you’re looking at is a continued shift in the direction of higher quality, in the direction of personalization.
And so when you look at digital products that are currently offered within insurance and you look at where those are headed, we’ve already seen a movement in the direction of high quality. And this is something that we expect to continue. One of the easiest ways to gauge this is to compare the user experience and really the overall customer experience with some of these digital products that currently exist against other similar products from competing industries or just other industries in general.
And traditionally, from the consumer standpoint, the expectations from their insurer were not always incredibly high. In fact, it was expected that, in a lot of cases, the experience that I may have with my insurer versus maybe some other digital experiences I have, whether that’s with my bank or with a retailer or et cetera, it was expected to be lower.
And now what we’re seeing is that the quality of these products has raised to a point where it’s now caught up to where many other industries are, and this is something that we expect to see happen. And so as you see insurtechs enter the market that are really born out of this idea of improving customer experience, as you see data become a bigger and bigger player in the digital experience end, and what’s being presented, what we should expect is that these products are going to be universally accepted as on par with many other industries.
As far as the people that are using these products and how they’re impacted, really when we talk about those that are insured, you’re going to see a number of changes, but the largest one by far will continue to be this movement towards personalization.
So this comes in a lot of different flavors. But what we’ve already seen is that insurers are moving towards products and experiences that allow the insured to really feel like the experience that they’re having with digital products. Whether that’s mobile, on the web, and with customer service scenarios are really supporting the idea that they are unique, that they are working with a vendor that really understands them, and that they’re being provided with services that are commensurate with the amount of money that they’re paying and the way that that money is changing hands.
And as this continues to improve, what you’re really going to find is that people are going to increase this bond that they have with their insurers. And we expect this to be true whether folks start to use multiple companies for different parts of their insurance needs or whether they actually go down the consolidation path and continue to use a single provider across a number of different entities.
On the topic of risk and how that fits in with some of the advancements in technology, within insurance, you’re really looking at two categories that, A, always meant a lot to this market and B, have taken just giant steps in the last couple of years, and by no means are done growing in terms of capability. So the first is the ability to be accurate in assessing risk and then in translating that risk to the insurance products that you offer. And the second piece of that is really how dynamic you can be with reassessing and re-evaluating where you are within those profiles.
On the other side, looking at the dynamic nature of when risk is assessed and what that means, traditionally there have been cases, and frankly, it’s been the norm to where when an insurance product is locked it is effectively locked and loaded for some amount of time. And whatever happens after that good, bad, or indifferent is basically accepted by the insurer as part of the rollout and something that they will, at best, be able to reevaluate at some point, but the idea of looking at future products and where they can find lessons learned. What’s happening now though is that there really is no concept of just “launch and forget it”.
The launch of a new insurance product, the launch of new capabilities within digital products, those really just mark step one on a never-ending set of improvements and adjustments. All of which is being data-driven, and all of which is able to really change on a dime.
And so whether you’re talking about new products or going after a new customer base, or whether you’re talking about existing relationships, existing products, and the way that those continue to change and are offered up to the insured as options for them to adjust on their side, all of this supports this idea of personalization and this idea of uniqueness without sacrificing some of the risk profiles that the companies themselves want to make sure that they are maintaining to keep their businesses safe.
Maurice Walker: Well, the future of insurance from a product perspective has gone to be completely ad hoc. In other words, you’re going to be looking at products being developed at the speed of the strategy. So what you’re going to see is multiple work streams working together in concert and a continuous-delivery or continuous-integration scenario. When it comes to the ecosystem, it’s going to be very, very optimized in order for them to do this and it’s going to be very customer-centric so, therefore, the design of the products or the offerings is going to be looking from the customer first and then they’re going to work backwards.
From a people standpoint, the teams that are going to be working on these products and offerings are going to be very cross-functional. So you can look at it almost as the tiger teams, where they’re going to be working together trying to get multiple initiatives completed. And then from a risk perspective, risk is going to be much, much easier to manage.
And when you look at risks, you want to be looking at three buckets: the technical risk, the risk when it comes to data, as well as the risk when it comes to the culture. So when you’re looking at the management of the risk, it’s going to be a part of that overall digital transformation strategy, and it’s going to be monitored by data analytics and the various analytical tools. The people that are going to deliver are the organizations that are delivering the products and the services has to be a part of that strategy team.
David Antoline: Anytime we talk about emerging tech, and this is true of the insurance industry as well, we like to focus first on really what are the real business drivers for adopting these technologies in the first place. It can be very easy for the market, for individual organizations to get caught up in the details of what a particular technology can or cannot do and how it might be applied.
But at the end of the day, when you look at organizations that are truly doing a solid job of incorporating these technologies into their business, those are the ones that still remain focused on revenue generation, on improving operating margin, and on improving working capital. These are all the topics that remain tied to kind of the baseline purpose for going down those paths in the first place.
When we look at that across the industry, what we’re seeing primarily is a focus on data. There’s a lot of good reason for that. First and foremost, established insurers are sitting on mountains and mountains of data. In some cases you’re talking about decades of information that is not only valuable in the sense that it contains a lot of useful information, but it can also form the bedrock of a lot of application paths when you talk about emerging tech that’s out there.
For example, one of the things that we’re seeing is the idea of, can we collect more information? Can we collect more information about our customers and what they’re doing in relation to the product sets that we have available and some of the expected behavior? Can that be stored en masse? In other words, can we scale to the point where we actually have a handle on all of this information? Can it be moved within the organization quickly and retained for analysis? And then can we kick that back to end consumers, to internal users so that we can truly do something useful and pragmatic with it?
That process, whether it’s the application of machine learning and artificial intelligence, to creating predictive models that allow companies to sort of make sense of all the data that’s being collected, whether it’s using technologies that frankly allow data to be pulled down more quickly to not bog down the system in ways that historically, frankly, would’ve prevented these organizations from collecting what they needed to.
All of these technology types are truly supporting this idea that at the end of the day, it’s really data that is most important. And the ability to move that data within the organization allow it to be consumed sometimes by external entities as well. And then to make good choices with what do we do with that information? How do we display it back? That really is at the forefront of where we’re seeing emerging tech applied in insurance.
If you look at organizations that are currently leveraging emerging tech in a way that’s truly working well, what you’ll notice is that they haven’t lost sight of really the combination of their business objectives and consumer demand. This can be really tricky because you’re really talking about a three-headed monster here. You’re talking about a push certainly from the market, certainly from technology groups to go further and further into some of these bleeding edge, cutting edge technologies that may or may not be at play currently within your organization.
You combine that with what the business certainly wants to be able to do. And some of the pressures that are now being faced by startups in the insuretech space, by continued consumer fickleness really in the market and just retention and what it means to really hold on to the customers that they have and in the pursuit of new customers as a continued business objective.
And so you take that, you combine it with the want, or the need to jump into emerging tech. Ultimately you have to combine those two things with what the consumers are demanding today. Some of that is going to be driven by competition. Some of that is going to be driven by what those same consumers are seeing in other industries and what they have come to expect from vendors across more than just insurance.
The organizations that are really able to take all three of those things into consideration are generally the ones that find the best spots to apply this emerging tech. That could be a data play, where a larger, more established company is leveraging the fact that they have years and years and maybe decades of data that nobody else has, and they choose to make that their play. In some cases, it may be that customer onboarding is where an organization feels like they can really make waves, do it in a different way, simplify things and get ahead of the curve. But in every case, it’s really keeping all three of those things in balance where we’ve seen organizations really make the most of adopting emerging tech.
The other element of emerging tech and how that plays into organizations in the real world is that you have to have a willingness as an organization to alter the way that your teams function and to alter the way that you look at success. Traditionally, particularly in IT organizations, you’ve had silos, you’ve had project-based metrics that are generally centered around some long running release and whether or not that gets deployed and it gets put into the hands of your customers as a digital product.
The shift that is necessary, if you really want to as an organization, say that you’re adopting, machine learning as something that’s going to be built into your operating procedure, or if you’re really trying to redefine what your customer experience truly looks like within that journey, you have to also redefine the teams that are doing the work, how they are organized, how they work together, where they’re getting their standards from.
And from a metric standpoint, and from a success standpoint, truly incorporating everybody across that chain into the idea that success is measured by the business objectives that are being supported by these initiatives. Success is being measured by how consumers are adopting these products, both the digital products that are being released and the insurance products that are offered within them.
Ultimately some of the dynamic behavior, some of the ability to really adjust on the fly, that folks are now starting to identify as important, incorporating those into your success metrics so that your team really understands why it is that they’re building what they’re building. And when they’re using some of these new technologies that truly do span the gamut of the customer experience, that they can feel like there is success to be had in shorter segments and on a continuous basis.
Maurice Walker: All the technology decisions should go through the prism of solving a business problem. So if there is going to be any kind of technical acquisition, if there is going to be any new product offering, or even when it comes to keeping the lights on activities or operational scenarios, you have to go all the way back to what business problem is solved.
Either you’re trying to reduce costs, you’re trying to increase revenue, you’re trying to make sure that you actually gain more within the marketplace, or even you’re trying to bolster yourself against new entrance into your market. There are a lot of different reasons why you have to, first of all, look at it from a business solution and then track it all the way back to what you’re going to be doing.
You start with the business problem, then you start moving to what hurts the business the most. It can be either you’re bleeding money, it could be that you’re losing market share, or it could be operational cost. It could be any kind of business problem. But what you want to do is make sure you triage that and then get to a point to where you’re able to provide those kinds of solutions from a business standpoint. And then the third part of it is, is you need to start getting more creative when it comes to providing the solutions from a technology perspective.
That’s where innovation comes in when it comes to making sure that you’re providing new technologies, but you’re leveraging those new technologies and you’re just not acquiring them just because the next company or the next organization is doing so.
David Antoline: The first step insurers can take to really start prepping for the future is probably the simplest one in terms of deed, but maybe the hardest one in terms of culture, and that is to get rid of using the word impossible. So often, especially with established companies, there is this mindset that we can’t do this, or that particular change is impossible because we’ve never done it before, because it would represent too large of a shift for the direction that we’re going in, et cetera.
I think if there’s one thing that we’ve found across organizations that have been able to successfully move to the future in a way that is taking advantage of emerging technologies, that is taking advantage of a lot of the options that are out there. Those are the organizations that took a step back and said, okay, it may not be a completely straight- forward path for us to get to where we want to be from where we are, but at the end of the day, these are not technologies that aren’t already in use in other markets.
These are not processes that aren’t already being used by our competitors, or, again, maybe in other markets. There are paths here that are well-worn, and it’s up to us to kind of look at those paths and apply them to where we are as an organization and the feedback that we generally give to our clients and the feedback that I would give to any company that is looking to kind of get started is to say, okay, first things first, you need to drop that word impossible from your vocabulary.
Once an organization has begun to prepare for the future, one important step that really predates defining technology stacks, defining architecture, or anything that is technical in nature, is to actually set back and define milestones that play to the organization’s strengths. So often what we see is that this idea of focusing on the future and the idea of thinking about technologies and capabilities that don’t exist today, it sometimes causes organizations to look around them, to look outside of their organization and say, what do we have to do to keep pace?
What do we have to do to catch up? And there are good things that come from taking those views on what’s happening around you, but when it comes to actually setting milestones for your organization, one of the most important things you can do is look at the strength of your business and say, these are the milestones by which we are going to judge ourselves. This is what we determined to be success for our business over this amount of time.
These might be the capabilities that we expect to have, and those fit squarely within our value proposition to our end customers. What we have found is that organizations that do that ahead of time and make it known not only to upper management and not only to say maybe the business side of the house, but also to the technology side of the house.
Those are the organizations that start to see digital products that are created that really support the same narrative, that start to see the application of data and the insurance products that are offered that, again, support this idea that there is something that we’re all marching towards, and that there are established milestones along the way that are going to allow us to sort of check ourselves and say, are we headed on the right path?
So it really is important to set those milestones in place before beginning down this path of establishing technical details or culture details. One really important step when you’re getting started with future planning is to take note of what is working today, and that’s true with the business, and it is true with the technology organization as well. And the combination of those two is really where you want to take good notes and celebrate the things that are working today.
There are a couple of reasons for this. The obvious one is that there is some positivity in pointing out the fact that just because change is happening, it doesn’t mean that everything is wrong and that everything needs to be replaced. And reinforcing that with your teams, reinforcing that with the people that are going to be a part of this move towards a future state is something that will bring some reassurement to them as they start down that path, especially when new skill sets may be required, new teaming arrangements may be required.
It’s good to kind of get everybody feeling good about what they’ve already accomplished before asking them to kind of go down this path with you, but there are actually some practical elements to this as well. One of those is you’re going to have a lot of noise from the outside around where everybody is headed, what technologies are being used, which patterns should be applied to which particular problems and some of those may be true, but the truth is a lot of those aren’t going to apply to your situation.
So identifying what it is that you do well today will also help you to stay focused on the changes that you want to make for the future in not trying to deviate too far from really the end results that you’ve seen be successful year after year, and in some cases, decade after decade. One of the worst things that organizations can do is to try to chase something that is fairly shiny, or is maybe brand new.
And I’m not just talking about technology, but also from a competition standpoint, and lose sight of all the advantages that they do have within their four walls already. Some of those things are data-related. Some of those are the strength of customer loyalty and folks that are fanatics about your brand and who you are and what you mean to them. Those are the types of things that cannot get lost when planning for future technology initiatives, just because they might not end up on some list of 10 that you find on the internet.
So it’s good to focus on both of those things as you move forward. Measuring your success in terms of where you expect to go and really setting expectations for what the future state looks like, is an extremely part of planning for the future. Historically, when you look at KPIs that are used, especially in the IT organization, they tend to be very focused on longer running initiatives. They tend to be focused on the deployment or release of something that could be a feature.
It could be a block of features. It could be an application. But in each of those cases, what we found is that while that worked historically because all the groups were sort of siloed, and that was a very easy way to determine success, when you start to identify future state in terms of your customer’s capabilities, in terms of internal users and what their capabilities and their functionality may look like and what they’re able to do.
And in terms of your product sets. Where that information comes from, how you manage risk, et cetera, those are such cross cutting elements that you can no longer just look at a release or the distribution of some digital product as something that should be measured from a success standpoint.
You really need to be looking at what is it that our customers aren’t able to do today that should be able to do in the future? How are they going to work their way towards that path, and how are we going to make that possible for them? What are the things that we should be able to do internally that support that same narrative in a way that stays true to our brand?
As you start to define these success metrics, you also need to hold your technology organization accountable to those same set of metrics, and they need to understand that what they’re doing is incredibly important to your ability as an organization to move in that direction. They also need to understand where, at times, they may not be doing the right things to support that mission and understand what they can do to adjust so that those things become more of a focus for the IT organization, more of a focus for the folks that are really focused on product and what that means to your end customers.
Maurice Walker: The steps that insurers can take right now in order to prepare for the future is, number one, you want to solve what the future looks like for you. Not everyone is going to have the same goals, not everyone’s going to have the same drivers so it’s an individual company goal. You have to start from the strategy, and then from there, you define what that future state looks like, and then you work backwards.
So, number two, then you start going into the prioritization and you prioritize your initiatives based upon what would make the greatest impact. Also, you want to see how you can deliver incremental value. And then, third, that’s when you start deciding upon what tools, or what technology, or even what partners you would want to engage with that can help you achieve that strategy.
However, it is best not to make big tooling decisions before defining what your future state goals are. So choosing vendors and partners without a defined strategy can just cause complexity and it can just rack up some additional costs. So you really want to start from the strategy first, build the roadmap and work backwards.
Managing Director, Commercial, Levvel
Throughout his 15-year international career, David has held senior leadership positions in both startups and top tech organizations alike. Prior to joining Levvel, David's team built what has become the de facto enterprise software platform within the collegiate athletics market. As MD, Commercial, David applies a dedicated customer focus to Levvel's world-class delivery model and product offerings.
Maurice Walker is a Director at Levvel. He has advised global corporations on how to maximize business value by capturing and leveraging actionable data to increase revenues, enhance the customer experience, and/or reduce operational experiences and time to market. This is accomplished by engaging various aspects of the business and technology organizations to provide and effective business case, and managed the entire process from solution-building, legal and financial modeling, as well as delivery management. Maurice currently lives in Kennesaw, GA with his wife, Chantel, and is the father of two sons—Marcus and Malcolm.