With the threat of obsolescence, the industry must position itself for growth
by Deb SmallwoodMs. Samllwood is the founder of Strategy Meets Action (SMA), an advisory and consulting firm to the insurance industry. Connect with her by e-mail: [email protected]
We’re busy gearing up for the Annual SMA Summit where innovation will take center stage. In the spirit of the Summit, I started to gather some inescapable facts that could inspire us all to innovate and improve – to truly become the Next-Gen Insurer.
All the time we hear about: We can’t afford not to innovate … Why innovate when we are growing profitably today? … Innovation is an essential ingredient to sustain success … Without innovation, the traditional business of insurance will become obsolete … We talk about think big start small … And the list goes on and on.
It’s true, innovation is critical to success today and for positioning for tomorrow.
But, rather than peddle the same old innovation benefits and business rationale, I thought it would be refreshing to share 10 facts about change and innovation that will directly affect insurance and that may inspire you, surprise you, or reinforce why you should be continuously improving by rethinking, reimagining, and reinventing the business of insurance!
The Top 10
- Younger generations like Millennials and Generation Z are going to be the biggest consumers in the market in next 5-10 years. Make sure you can reach them. They will not use paper applications or have a personal face to face meeting, but they will be searching for options from their phones and cars. A typical mobile user checks their phone over 100 times a day (Marketing to Millennials).
- Innovative workplaces attract the best and brightest talent. Today, word of a stale, outdated work environment spreads fast. Don’t be one of those employers. Invest in talent, but also invest in your infrastructure and creating an innovative workplace (How Great Companies Attract Top Talent).
- A majority of insurers (65%) have focused on innovation for 5 years or less. You aren’t alone, and surprisingly, you probably aren’t far behind. With the right focus, you can make remarkable strides in a short amount of time (SMA Research: Innovation in Insurance: Expanding Focus and Growing Momentum).
- 80% of all crowdsourcing is done by small business and start-ups. Embrace the crowd! It is often the most cost-effective way to generate new ideas. It isn’t just for small business and start-ups: big business loves the crowd, too. Just look at McDonald’s crowdsourced burger or Apple’s crowdsourced mapping tools (Crowdsourcing: Great For Your Business).
- The amount of stored data doubles every 24 months. The U.S. Census estimates that the population has grown over 27% in the last two decades. Changing demographics, aging citizens, and diverse populations are literally changing the face of data accessible to insurers. In order to stay on top of it, you need a data and analytics strategy that makes the most of the new data available (Vernon Turner).Younger generations like Millennials and Generation Z are going to be the biggest consumers in the market in next 5-10 years. Make sure you can reach them.
- Wearable devices have grown 200% every month since 2012. This doesn’t mean that wearables won’t eventually be replaced by something else or evolve. It means that wearables are growing so fast, it makes sense to try to tap into some of that innovation and apply it to your own organization, your processes, or even your products (2013 Internet Trends).
- It is six to seven times more expensive to acquire new customers than it is to keep existing ones. One risk of not innovating is that you may start losing customers who can find better, easier-to-use alternative insurance options. Studying consumer behavior might be the best indicator of market trends and areas to innovate. Don’t lose renewals because you haven’t kept up with market demands (15 Statistics That Should Change the Business World But Haven’t).
- Over 40% of the companies at the top of the Fortune 500 list in 2000 were not on the list in 2010. The digital age shuttered many long-standing businesses. Some experts think that in the next decade, businesses that do not embrace innovation or adapt to market demands will suffer the same fate. Insurance is not immune to this phenomena. Today, everything is connected (Sorry We’re Closed: The Rise of Digital Darwinism).
- Just 10 percent of cars were connected to the internet in 2012, but by 2020 it is estimated that 90 percent will be. It is amazing to think of how quickly we are witnessing innovation expand. What was once an outlier is now a standard (Amazing Facts Everyone Should Know About the Internet of Things).
Internet of Things (IoT) technology has the potential to add $10 to $15 trillion to global GDP over the next 20 years.
- The Internet of Things is big now, but it won’t be as big and as impactful forever. Like the connected car, IoT will eventually become standard. What insurers chose to do with the new data available and the amazing growth potential will ultimately make or break them (Internet of Things Market Statistics-2015).
These facts are inescapable. Not only is innovation here, but the statistics are astounding. The time to embrace innovation and become the Next-Generation Insurer is now.
“Internet of Things Market Statistics-2015”. (2015, March 5). Retrieved from Iron Paper: The Blog: http://www.ironpaper.com/webintel/articles/internet-things-market-statistics-2015/#.Vdp8NLHD-M9
Fromm, J., & Garton, C. (2013). Marketing to Millenials: Reach the Largest and Most Influential Generations of Consumers Ever. AMACOM.
Gorman, C. (2014, January 15). How Great Companies Attract Top Talent. Retrieved from Talent Culture: World of Work: http://www.talentculture.com/workplace-culture-and-innovation/how-great-companies-attract-top-talent/
Marr, B. (2015, May 20). 12 Amazing Facts Everyone Should Know About the Internet of Things. Retrieved from LinkedIn: https://www.linkedin.com/pulse/12-amazing-facts-everyone-should-know-internet-things-bernard-marr
Meek, T. (2013, June 6). Forbes Tech. Retrieved from Crowdsourcing: Great For Your Business: http://www.forbes.com/sites/netapp/2013/06/06/crowdsourcing-for-business/
Meeker, M. (2013, May 29). 2013 Internet Trends. Retrieved from Kleiner Perkins Caufield and Byers : http://www.kpcb.com/blog/2013-internet-trends
Shaw, C. (2013, June 4). 15 Statistics That Should Change the Business World But Haven’t. Retrieved from: http://beyondphilosophy.com/15-statistics-that-should-change-the-business-world-but-havent/
Smallwood, D. (2014). SMA Research: Innovation in Insurance: Expanding Focus and Growing Momentum. Retrieved from Strategy Meets Action : https://strategymeetsaction.com/our-research/innovation-in-insurance-expanding-focus-and-growing-momentum/
Solis, B. (2012, February 27). Brian Solis: Defining the Impact of Technology, Culture and Business. Retrieved from Sorry We’re Closed: The Rise of Digital Darwinism: http://www.briansolis.com/2012/02/sorry-were-closed-the-rise-of-digital-darwinism/
Turner, V. (2014). Retrieved from http://www.emc.com/leadership/digital-universe/index.htm