By Tom Murray, Head of Product Strategy for LifePlus Solutions at Majesco.
These could be existing players adapting to the new environment quickly or new entrants who already have the technology and customer base to make an impact in the life and pension market.
New entrants have the advantage of being able to innovate new financial products and services without the burden of supporting legacy sales and the legacy infrastructure traditional insurers need to support older products. The surprise of 2020 was the speed at which most life insurers were able to rapidly make changes to support their businesses in a radically different environment. However, many of the changes made to do this were temporary.
Now that the online move has solidified, insurers need to examine how to capitalise on their initial makeshift response. Having being forced to move at a faster pace, they need to assess whether to keep going as they are or to use the digital-centric focus that was forced on the organisation to inspire a radical redesign of their business strategy.
At first glance, the idea of a dramatic shift is tempting. Many organisations have been weighed down by the limitations of their legacy infrastructure for years, which has hobbled both the ability to develop new products and services and the time-frame it takes to implement them. They also have processes and a staff mindset that is constrained to think within these limitations.
Like dinosaurs, the companies have lumbered along for generations and now fear that the pandemic is the equivalent of the asteroid smashing into the earth and wiping out the dinosaurs while leaving the more agile animals in place. A move to more flexible, cloud based systems would be transformative for the company inside and out; by giving the employees new opportunities to collaborate and innovate they would be able to design products and services that could be market leaders in the post-pandemic economy.
The fear holding them back is that they know, based on previous experiences, that large projects are notoriously difficult to implement; most large life and pension companies have a history of partially-failed mega projects that ran for way longer than initially projected and ended up massively over-budget. Boards, having been burned before, are generally reluctant to sign off on large strategic bets.
Insurers will realise that one of the major benefits of the digital redesign is that the nature of the technology means that it is not necessary to commit to large and risky projects in order to embark on a digital journey. Innovation and incrementalism are not mutually exclusive. In fact, changing in stages can be a better approach as it enables advantage to be taken of new ideas and technologies that occur after the start of the project.
Taking an incremental approach can be better for the organisation. All life insurers have had to adapt on the fly due to the pandemic and the effect of the intermittent lockdowns. This has shaken up the time-worn processes of the companies and shown the staff that there are other ways to run the business. Maintaining a continuous culture of smaller changes in the business will mean the shift to a digital strategy for the future is easily achievable and will bring the employees and the existing customers along with it. It also allows the company to experiment with new ideas and products at a much lower risk-level, making it easier to get Board approval for new projects.
Implementing a cloud-based platform to act as a hub for present and future services can be integrated easily with existing legacy platforms to allow new services to be rolled out for existing customers without the need for huge migration projects. These platforms can facilitate the introduction of new products and services that help the life and pension company penetrate the younger, more digitally aware generations, generations that live their life online and are instinctively more attracted to the new Insuretech entrants rather than the traditional life and pension providers.
Moving to a cloud-based platform means that the provider can easily work with partner organisations that provide related services to improve their customers’ digital journey and give consumers a new and more personalised life and pensions experience. Without this, traditional life and pension providers will be unable to compete in this new normal of predominantly digital commerce.
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