Does Insurance Modernization Matter?
Insurance Experts' Forum, March 21, 2014
This blog entry is the first of a two-part series.
Insurance modernization doesnít matter? Most people in the industry would hotly disagree.† †
Over the last 15 years Iíve interacted in one way or another with dozens of insurance carriers of all varieties. Virtually all of them have been, or are on, the modernization journey; many of them at least a few times. ††
Analysts, vendors, consultants and motivational keynote speakers at industry events ó all of these people frequently exhort everyone to modernize: Modernize or die is their rallying cry. Growth, speed to market, product and service innovation and operational efficiencies are the promises. ††
Itís as if a modern day Pied Piper of Hamelin was playing some mystical tune thatís luring everyone in a trance-march toward modernization. Armies of people have no doubt slogged hard. Insurers have bought. Insurers have built. Insurers have executed onshore, offshore, near shore and every hybrid in between. ††
There are special workshops held to teach CIOs how to sell modernization to the CEO and the board. There are events, online forums and probably even therapy sessions to exchange experiences ó Iíll tell you about mine, if youíll tell me about yours. Hundreds of millions ó perhaps billions of dollars ó have been spent. ††
Yet, Iíd be hard-pressed to convincingly name those that have truly realized the modernization promise or its benefits in a quantifiable sense. I canít think of an insurance company that has failed or gone out of business for lack of modernization. I canít find statistics of carriers that have modernized and, as a result, ďstolenĒ sizeable market share from those that havenít. ††
Consumers arenít impacted much, or if they are, their marketplace behavior doesnít seem to reflect that. How serious is the service inconvenience when you have to interact only three or four times a year at most with your carrier? True, I couldnít pull up my proof-of-insurance on my mobile recently while getting a loaner from my Acura dealer. But my agent faxed it over in a minute (apparently a few of those machines are still around) and I got on with it. ††
Unlike the consumer electronics industry that is constantly rolling out compelling new products (drones are now in), the insurance industry hasnít introduced an innovative insurance product or coverage that I can recall telling myself I had to have. And I havenít personally come across huge price differentials being offered by the modernized haves versus the have-nots. (They may exist, but I havenít seen them.) Pricing appears relatively uniform, much like the airline industry. ††
Based on the available evidence then, shall we conclude that insurance modernization doesnít really matter? Is this all just another over-hyped hype cycle that solutions providers and insurers alike feel like they shouldnít miss out on?
Modernization definitely matters, although maybe not in the short-term. It may not matter for those of us who are Baby Boomers or even Gen-Xers, although this may be argued. But for insurance carriers that have been around a while and wish to be reckoned with for the coming decades and longer, it absolutely does matter. In Part II, Iíll discuss why.
Ram Sundaram is a principal of X by 2, a technology consulting firm that specializes in IT transformation projects for the insurance industry.
Readers are encouraged to respond to Ram using the ďAdd Your CommentsĒ box below. He can also be reached at†firstname.lastname@example.org.
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