The changing insurance marketplace sees new ideas proposed regularly. Although many of these don’t translate to revenue generation, a few disruptive ideas do stand out. A recent estimate indicates that the number of insurtech players operating today is in the thousands. They’re working on various stages of the insurance lifecycle, from easier onboarding to faster claims processing.
We also see a constant demand for insurers to run their operations effectively and embrace new changes. While all these new initiatives are encouraging, it’s important for regional insurers to choose the right one and invest their limited resources appropriately so that they remain relevant in their line of business.
Every company has its business challenges, but for smaller insurers the lack of budget is a major constraint. A recent Guidewire survey, “Top 5 Imperatives of 2021: Insurer Priorities, Challenges, and Successes,” focused on understanding the challenges insurers face. It found that budget is one of the major obstacles for insurers.
Stuck between a stringent budget and the need to innovate, smaller insurers might want to focus on the following three ideas to achieve success.
Make small improvements: Core system modernization is challenging, and those projects cannot be taken every year. However, insurers can always try small add-ons and features that would go well with their core system. A starting point for these insurers is to have a modern core system hosted in the cloud with the ability to integrate with disparate systems. They need to use that infrastructure, make small investments, and choose features that are complementary to their core. These improvements can be in processes or in tools (software, apps, and more) and primarily focused on revenue growth.
Take a fast-follower approach: Along with making small improvements, smaller insurers need to choose initiatives that have already proven their value. Instead of prioritizing an idea that has not proven its market potential, it’s wise to choose proven tactics for growth. For example, a digital presence could be an item of priority for these types of insurers. So investing in an online portal or app for their customers would be a prudent choice.
Be agile: The nature of the business is change, and the pace of change has become more rapid with advancements in technology. A small insurer’s best advantage is its size, since changes can be more easily implemented without multiple meetings and with fewer executive decisions and stakeholders. Small insurers need agility for continuous improvement and innovation. However small it might be, a quick improvement is going to be the key to success.
The insurance business is going through a rapid transformation. With new players appearing in all lines of business, small insurers need to have a strong defensive strategy and keep their customer base intact. Implementing any or all of the strategies discussed in this blog post would help them maintain their current foothold and run their business as a sustainable operation.