“Technology is at war with the insurance industry, but insurance doesn’t know it yet.”
These words by Steve Mariano, CEO of Patriot National, in his keynote at the recent ITA LIVE conference stirred attendees and promoted vigorous discussion and post-event commentary. No doubt his statement was intended to provoke and well it should.
Mariano did not mean that insurers are fighting to implement or utilize technology solutions (although many of those with legacy core systems may feel that way). Instead, his point is that insurers are in a widening battle with technology giants such as Amazon, Google and Apple for their traditional markets. Flush with cash and high market valuations, these technology titans have declared and undeclared interests in parlaying their technology and customer connections into premium margin.
Our measure is no longer insurer against insurer
Mariano views the lines between technology management and management of the distinct business operations of insurers as blurring. To illustrate, he noted that his company no longer has a COO because operations decisions are now technology decisions. How insurers handle technology will be defining for their futures.
Mariano is not alone in his outlook. National Lloyd’s CEO Bob Otis echoed the sentiment by stating that from this point on, “Our measure is not against each other, or how we did yesterday; the measure is against the Amazons and Googles.” For some insurers, says Otis, this is not news; they understand that IT is the business. Look outside the industry for examples and ask: Is Amazon a retailer, or is it technology? Is Uber transport, or is it technology.
Collaborators will win
Emerging technologies and technology companies present a fundamental challenge to insurance business models. What then is the key to success? How do insurers prevail in the technology turf wars? Mariano offered some advice: “Collaborators will win the next decade.”
To survive and grow in this new competitive environment, insurers will require new business models that can incorporate new partnerships—for technology, information or distribution—connected via open and reliable data platforms. Ironically, in a perfect playback of the phrase “keep your friends close and your enemies closer,” Google or Amazon may be one of those partners.
The smart thing to do is be sure your company is ready by replacing legacy core systems to do these three things:
- consume data and big data;
- integrate easily to an ecosystem of distributors and services beyond what is known today; and
- engage customers with personalized products and experiences.
Let technology de-risk the world
Another way to look at the current situation is that technology allows de-risking of the world. So if I am an insurer, I am in the business of risk, and understanding and leveraging new and disruptive technologies is important to me. The way technology will mitigate risk will change the business; if insurers can build that reduction of risk into their product up-front, they can productize it before the technology titans do...or in collaboration with them.