Industries and businesses have traditionally been defined by four primary phases or some variation thereof: startup, growth, maturity and decline. A legitimate argument can be made that maturity is no longer a sustainable or even existing stage for any sector, including the ancient one of insurance.
One of the long-held earmarks of the growth stage is vigorously engaging in the establishing and refinement of business processes. With the endless torrent of fresh technical capabilities, organizations now must continuously retool their procedures, permanently relegating them to the growth phase, or likely find themselves declining and ultimately failing. Businesses no longer have the luxury of maturing, where the operation is largely on autopilot and predictable.
It is widely known and accepted that insurance, like so many other trades, will undergo a sea change in the very near future. A piece in McKinsely Quarterly, Automating the Insurance Industry, from January 2016, forecasts that up to 25% of jobs may be lost by 2025 in insurance, spread across all business functions. However, there will be a net gain in employment among those in roles that are capable of delivering a higher added value. The authors of the McKinsley piece, Sylvain Johansson and Ulrike Vogelgesang, attributed much of the upcoming turmoil to continued digitalization and machine learning, and it is in these domains where opportunity exists to make a significant contribution to operational efficiencies.
Danni Santana efficiently distilled how panelists, at the Exponential Finance conference in New York, described the methods providers of insurance tech, specifically AI, can deliver the higher value add necessary to remain viable. Chiefly, insurers need mechanisms to collect, mine, analyze and apply the plethora of unstructured data, now available and forthcoming, for back-end services. This is a pivot from what has been the recent demand by carriers, which had been focused on front-end applications. The demand is enormous and fragmented, as technical needs vary dramatically from categories (health, property, casualty, etc.) to carriers, who may be regional, national or global. And of course, none of those models are static, furthering the call for flexible technology and personnel.
AI, machine learning and self-coding applications are all ideally suited to address those demands. Providing analysts and managers, in all departments, who are not seasoned programmers with the ability to easily and rapidly develop applications, using natural language will prove an invaluable asset. Carriers who continue to rely upon teams of developers to crank out, test and maintain programs will be hard-pressed to compete with pacesetters employing self-coding and self-maintaining technology. An army of programmers has no chance of keeping pace with even a single server, working around the clock, sniffing out new data sources, and testing and optimizing models 24/7/365, much less a rack or entire data center.
No doubt that the insurance industry will survive the forthcoming shakeup. For over 3,500 years, consumers have sought a means of distributing risk and that objective will live on. What won’t survive the fallout are technology providers who are unable to deliver viable products or insurers, themselves, who fail to continuously adopt emerging tools and methodologies.
Working closely with one of our clients, Pan-American Life Insurance Group, over the past five years, I have seen firsthand what a substantial impact can be had by wholeheartedly embracing emerging technologies. Pan-American realized a 38% increase in net income, a 25.7% increase in revenue and a 17 % increase in total premiums, for fiscal year 2016. Those gains were by no means attributed solely to GeneXus solutions, as Pan-American staff poured the sweat equity necessary for those impressive results, but our technology definitely helped.
Primary impetus for this post is the upcoming Insuretech Connect (the world’s largest gathering of insurance leaders and innovators), held in Las Vegas on October 3rd and 4th. The Insuretech Connect put on a phenomenal event, last year. I am personally very excited to see the developments and insights, which will be presented this year, and strongly encourage anyone involved in insurance tech to attend.
As a side note, anybody in the New York area who is looking to better understand and navigate the insurance tech ecosystem, should hit up Stacy Brown, founder of InsurTech Hartford, and a 15-year IT veteran. Mr. Brown is an excellent resource and has assisted tech firms, especially startups, with meet-ups, hackathons and educational seminars. He has absolutely illuminated aspects of insurance tech for insurance industry veterans and the new crop of entrepreneurs looking to provide insuretech solutions so sorely needed.
Finally, of course, for anybody seeking assistance with a particular programming solution in insurance tech, by all means reach out to me anytime (and do consider joining our Digital Transformation Meetup if you’re in New York City). As Gartner’s recent announcement of our inclusion in their Magic Quadrant report as NEW Challenger indicates, we excel at challenging “business-as-usual.” For carriers looking to navigate their companies into the future, embracing a “challenger spirit” is a must. I’d be delighted to help and to learn more about your organizational goals.
Until next time, ciao.