Innovation has now reached all corners of the insurance industry as regulators and review agencies join in to create the Future of Insurance
August 20, 2019 — MORRISTOWN, N.J.–(BUSINESS WIRE)–Majesco (NASDAQ: MJCO), a global leader of cloud insurance software solutions for insurance business transformation, today announced the release of a new research report, The Future of Insurance: Optimization, Growth and Innovation.
The report highlights the forces that have been putting tremendous pressure on insurance to transform to a digital, outside-in, customer-first industry, accelerated by the rise of InsurTech beginning in 2015. By taking a two speed strategy, by modernizing and optimizing the business for speed of operation and by creating a new business of the future for speed of innovation, insurance leaders are creating innovative products, services and business models by redesigning organizational and business model structures. These leaders are embracing digital technology and data and analytics to better understand, underwrite and service their customers with tailored products and services that are more personalized than ever and meet the under- or unmet needs of a rapidly changing market.
As noted in Majesco’s Strategic Priorities research, incumbent insurers who are embracing the changes and new opportunities – the Leaders – are advancing at a greater pace than Followers and Laggards, putting them at increasing risk of irrelevance. But new developments in the regulatory front may be what is needed to give a push to Followers and Laggards.
Pace Of Change Challenges Insurers and Regulation
“This pace of innovation and change is challenging insurers and regulation,” commented Denise Garth, SVP of Strategic Marketing, Industry Relations and Innovation at Majesco. “As InsurTechs and Insurance leaders create new business models, products and services to meet rapidly changing customer demands and expectations, we are beginning to see the shifting views and actions by regulators and rating agencies. Whether to meet the new customer expectations, making sure new risks are appropriately covered, or ensuring the viability of insurers in this changing world, regulators and rating agencies are increasingly engaged in shaping a new era of innovation and the future of insurance. These actions will accelerate innovation for the industry in positive ways, setting a new bar for all insurers seeking market leadership.”
The first of these actions is with the proposed AM Best Innovation rating as a component of the annual rating process. The second is the Sandbox concept originally proposed at the NAIC, now being adopted by several states to promote and support innovation within the insurance industry. This cohesive blend of innovation and regulation is yet another forceful driver that will help reinvent the insurance industry.
The report goes on to provide guidance to companies on how to adapt and respond to the pace of change, using a Two-Speed Strategy that embraces both the transformation of existing insurance operations and the launching of new business models or products:
Speed Of Operations
Speed of Operations for the traditional business model with mature systems and processes needing incremental operational improvements through modernization and optimization using modern cloud and API-based modern solutions;
Speed of Innovation for agile, fast and MVP models to explore, test and learn from new business opportunities – many in 12 weeks or less – by creating the new business for the future using next-generation native cloud, microservices and API-based solutions.
The time for plans, preparation, and execution is now – recognizing that the gap is widening and the timeframe to respond is closing. Leaders are adopting new technologies, business models and products at an increasing pace. Leaders, as early adopters, are positioned to succeed. Time will tell if Followers and Laggards will survive.