Earlier this week, Novarica hosted the latest in our Special Interest Group series of executive round table discussions, which in this case focused on individual life insurers. This line of business currently faces significant technological change, and due to the preponderance of legacy core systems, coupled with increasing customer baseline expectations, it will soon be “crunch time” for many carriers. Specific topics of discussion included potential industry disruptors; the difficulty of finding—and keeping—IT talent, especially for insurers outside of major metropolitan areas; challenges in selling life insurance to the Millennial generation; and the vendor solution marketplace.
In elaborating on the ripeness of the insurance industry for a disruptor, the carrier and Novarica representatives shared a wide range of perspective on key issues which provided the foundation for an informed, yet informal discussion that continued throughout the entire day. Although all attendees are anticipating an Uber-like disruptor for insurance, clarity on what that will look like remains elusive. The participants described the challenges of balancing long-term investments in “business as usual” with preparations for disruption—particularly around making sure core systems will allow for the agility and decisiveness necessary to respond to a major industry shift.
A lively discussion ensued regarding the problems insurers face in keeping top talent. A major regional carrier headquartered less than two hours from a major American city shared that he had more than a few open business intelligence positions, and filling them was a serious problem. Others chimed in with similar problems. Couple that with the fact that the average agent is now 59 years of age, and the industry is looking precarious in a range of key skilled positions. Some carriers have recognized the challenge associated with attracting key talent to smaller markets and have taken the offensive to open satellite facilities that are in locations closer to where “the action” is. This is very much in keeping with the ongoing “urbanization” of North America overall.
There was much cause for hope, however. Many of the CIOs in attendance were happy to share their experience with building relationships with local colleges to speak about the industry and the interesting roles therein. One even mentioned starting to connect with local high schools to support STEM programs that could create a future pipeline for talent. This strategy is not only focused on developing excitement about the prospect of careers in the insurance industry, but also producing graduates with skill sets that are better aligned to the data science, analytical and analysis needs of the modern insurer.
This led to a discussion regarding issues life insurers face with Millennials broadly, as employees, producers and consumers. For example, the methods of buying and selling insurance are very, very different for Baby Boomers compared to their children. However, not all participants were in agreement—some carriers argued that adoption of technologies like mobile devices wasn’t necessarily skewed by demographics, while others argued that insurers need to pursue a “bi-modal” strategy for their sales and customer service capabilities. Only time will tell, but one thing that Novarica has referenced achieved universal agreement: in the future, “one size fits all” approaches may well turn into “one size fits none”.
This naturally led to a discussion of the solution marketplace and the associated challenges. Gamification, specifically to incentivize behaviors that life insurers find lead to profitable outcomes, will become increasingly important. The IoT, having gained major traction in P/C circles, is gaining in acceptance in the life sector as well. Carriers are looking to better understand, for example, how wearable technologies could fundamentally change risk analysis and the nature of communications between carriers and customers.
A great example of this, tying together how both millennial customers and technological change will affect the industry, was a personal story shared by a participant on a recent effort to buy life insurance. A paramedic came to his home and withdrew three vials of blood, necessary for the tests at the three carriers he was considering doing business with. For his Baby Boomer generation, a test like this was likely considered relatively routine (if not painless). Two recognitions came from this experience: as a Baby Boomer, this may be the last time this individual ever purchases life insurance, and the process optimized to address the needs of this generation will be untenable for Millennials, now accustomed to instant gratification and painless processes. The potential for doing underwriting in a completely different way is now within the conceptual grasp of many carriers.
As always, the format for these Special Interest Group sessions provided for a frank, open, thoughtful and (of course) private sharing of experiences and perspectives. The CIOs involved were happy to be able to share their hopes for and worries about the future, and especially to know that they’re not alone with many of the challenges they face!
This blog entry has been republished with permission
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