When an industry comes together, everybody wins
by Trey ReynoldsMr. Reynolds is Executive Vice President, Strategy & New Business Development, for MIB, a data and risk management company providing solutions to the life insurance industry since 1902. Visit www.mibgroup.com.
Many books have been written about the benefits of collaboration. Most of us, if not all, would agree that effective collaboration is key to the success of any organization. But when most of us consider the topic of collaboration, we think within the framework of internal collaboration – working with our colleagues to move our own business forward and advance ahead of the competition. In terms of product development, internal collaboration applies to the development of new products and services within existing resources or working to identify acquisition opportunities to fill gaps.
Another form of collaboration, one that can be just as critical to an organization’s success, is competitive collaboration. Working together with other organizations in your industry to address common challenges for the betterment of all. Why, you may ask, would any organization want to intentionally cooperate with their competition? Well, when it comes to certain big challenges when an industry comes together, everyone wins.
Benefits Of Competitive Collaboration
There are many challenges that are consistently shared across all players in the insurance industry. And for these types of challenges, the saying that “the whole is worth more than the sum of its parts” rings true. For example, everyone is looking to increase consumer awareness of the need for insurance. To achieve that, we need to be able to reach consumers with information and education. A joint industry awareness effort, such as Life Insurance Awareness month in September, helps break through the many messages out there competing for consumer’s attention and can help move the entire industry forward.
The same holds true for bigger shared industry challenges, for example fraud prevention, emerging regulations and new technologies such as automated underwriting and budding use of artificial intelligence (AI). For some solutions of this magnitude, an industry wide view is required not only to fully understand the implications of the issue, but to create a solution that can truly and fully address the challenge. Any single player operating alone may have a lens to a piece of the puzzle, but to put all the pieces together requires collaboration and sharing of information across the industry.
Barriers To Successful Competitive Collaboration
If so much more can be accomplished when competitors collaborate, why isn’t this the norm? Challenges that can be impediments to successful competitive collaboration include a resistance to sharing information due to the nature of normal competition, and the need to invest time and resources to the ideation, development and testing processes of creating any new solution. Willingness to adopt new solutions that come from competitive collaboration can also be an obstacle. Groups can produce the most effective of solutions, but in an industry slow to change, adoption can remain an issue for some time. Last but not least, finding the right partner to work with can also be a challenge as it means building trust, comparing and sharing expertise and obtaining a shared commitment to see a project though to fruition.
In the life insurance industry, competitive collaboration can be particularly challenging. Our industry is based on long standing institutions, stiff competition and complex legacy systems that can be difficult to change. Our distribution system is also complex, and a key industry challenge for any project is making sure changes are beneficial to all parties from the carrier through BGA, agent and end client.
Examples Of Successful Competitive Collaboration
While competitive collaboration in the life insurance industry may be challenging, there are several examples where it can and has worked successfully.
1.) Fraud Prevention
As we all know, fraud can cost the insurance industry millions, if not billions, when gone undetected. When the industry is able to control fraud, we are collectively able to ensure that pricing is fair so that companies can offer, and consumers can purchase, life insurance protection that is affordable.
One of the main ways the industry prevents fraud is through competitive collaboration, and it has done so since 1902! MIB was formed by members of the insurance industry who understood the best way to detect and deter fraud was for the industry to come together. Today, MIB members consist of the leading life insurance companies in the US and Canada.
MIB’s business model for our Code Solutions and In Force Data Solutions can be described as an ”information exchange,” because MIB member insurance carriers contribute information of underwriting significance about insurance applicants to the MIB database. That information is later accessed by other MIB members, with the authorization of the applicant, who perform a search of the database as part of the underwriting process.
For over 100 years, this type of competitive collaboration has helped the industry as a whole address the challenge of fraud and ensure that honest and forthright applicants are not carrying the expense of those who have undisclosed adverse risk.
2.) Field Underwriting
We all know the old adage that life insurance is sold, not bought. However, recent advancements in the digital space, driven in part by the covid-19 pandemic, are changing the way life insurance is bought and sold. In the digital age, ensuring a consistent experience for the agent and the client is more critical now than ever. Leveraging competitive collaboration is a vital way to achieve that.
Digital tools have emerged that can facilitate the ability to gather requirements, establish quote classes and even fully underwrite policies across multiple carriers through a single interface. To be effective, the developers of these tools must accommodate rules and requirements across a variety of competitors. The most successful of those developers leverage advisory groups that bring together users from all stages of the process to provide insights and feedback to advance the technology and meet the emerging needs of the industry. Competitive collaboration, in this context, works in the form of advisory groups consisting of competing agents and carriers sitting at the same table (though many times a virtual table), sharing their pain points and providing feedback to help improve industry tools and processes.
3.) Advisor Contracting
Another example of a company that leveraged competitive collaboration with members of the life insurance industry comes from Canada. APEXA brought together representatives of leading Canadian MGAs, carriers, industry compliance professionals, service providers and advisors to address challenges related to inefficiencies and a lack of standardization in the advisor contracting process. The group worked together, providing knowledge and support to establish a new standardized industry-wide contracting and compliance solutions that digitally connect Canadian advisors, MGAs and carriers. Through this competitive collaboration, the team removed duplication of processes, streamlined processing and provided a secure and centralized location for carrier-agent contracts. Today, APEXA continues to be overseen by members of the Canadian life insurance industry and has over 45,000 users operating on the system.
Tips For Effective Competitive Collaboration
Partnering can be a great way to address industry wide pain points and is also an effective and often efficient way to bring new products and services to market. Here’s some pointers that MIB has found effective as we have lead collaboration efforts across the life insurance industry:
- Consider involving a neutral third party who can manage the project, counteract any competitive pressures and oversee the sharing of proprietary information in a way that leverages it for the project, but keeps it secure and confidential.
- Find partners who share a common objective, have the industry’s best interest at heart and exude confidence in their ability to focus on a win-win scenario.
- Leverage association meetings and industry conferences to identify like-minded individuals and organizations for potential partnership.
- Know your own strengths and where you have gaps. Find partners who bring a unique strength to the partnership that compliments yours, so that you each bring something different to the table.
- Ensure partners share your philosophies for project management (like agile), your commitment to the process and are willing and able to match your dedication and resources.
- Follow an agile methodology that includes a continuous feedback loop with your partner(s) and with your potential clients throughout the ideation and development process.
- Start with a minimum viable product (MVP) – Instead of thinking about innovation in the context of a major product launch that takes years to develop, break solutions down into a minimum viable product that can be tested in market, validated for value and then enhanced.
- Participate in customer advisory groups to help ensure your own vendors are able to meet your ongoing needs.
MIB, as a neutral third party, has often leveraged this type of competitive collaboration model to bring to market services that address long standing industry challenges and also to manage enhancement efforts for our existing services. We are fortunate to represent the industry as a whole, but like any organization, we don’t have all the answers. We use competitive collaboration initiatives, leveraging the tips noted above, to help us identify unmet needs and ensure our developing products and services will effectively meet those needs.
The insurance industry is evolving like no time ever before. Changing customer expectations and needs, the evolving digital landscape and new competitors with new business models are all shifting the way insurance is bought and sold. The collective industry is facing several overarching challenges as we all work to adapt and advance. By coming together to address the big challenges, by sharing our strengths, our information and our insights for the betterment of the industry, competitive collaboration can truly be a win-win process for the insurance industry.