Aite-Novarica’s Insurer Regional Roundtable in Philadelphia: Automation, Innovation, and Market Transitions

Aite-Novarica’s Insurer Regional Roundtable in Philadelphia: Automation, Innovation, and Market TransitionsWe recently facilitated a roundtable discussion focused on insurers from the Greater Philadelphia area. These roundtable meetings are confidential knowledge-sharing meetings where our team can share recent research results and participants can discuss industry trends. This latest discussion, guided by the interests of participating CIOs, focused on three major concepts that the modern insurer must grapple with: automation, innovation, and transitions in the market.

Automate to Augment, Not Replace

When introducing automation, forethought must be given to the human elements and change management. Adding components of automation to an underwriter’s workbench, for example, may be immediately embraced by the underwriters; they want to be able to access as much information as possible quickly and easily.

Underwriting assistants and policy service technicians, though, may see it as a threat. By controlling the messaging, these key members of the team can be brought into the fold. It’s critical that they know, for instance, that automation is being introduced in order to make them more efficient, not to replace them. If they know that the goal is to make their lives easier as the book of business expands, they will be more likely to embrace new technologies. Ensuring that employees understand how changes will impact both people and processes is critical to long-term success.

A similar example of pushback and message control can be seen in efforts to add automation to the QA process. When automated frameworks are introduced, manual QA testers may become concerned that they are being replaced. However, the value those people bring is not in performing the tests, it’s in their domain knowledge and their ability to understand the outcomes. The adage that “things go better when they happen with people, rather than to people” is a key element in any change management effort.

It can take time to show people that they are valued, and as much as you might tell them that, they will need to see it for themselves. There are a few tricks to help bring them along:

  • Recognize and speak to different experience-based groups (e.g., seasoned professionals who aren’t likely to trust new data, new employees who will believe whatever the data says)
  • When issues arise, blame the technology first—even if it’s not at fault—to build trust
  • Ensure that there are business partners invested in improvement

Innovation in the Face of Adversity

At the outset of the pandemic, there was a clear focus on short-term innovation; companies had to get through the day, week, or month, which meant that speed was critical, even if it produced solutions that were less than optimal or far from scalable. As things begin to stabilize, it’s time to look at both short- and long-term innovation, which can be difficult when day-to-day operations demand attention.

Insuretech and fintech investment was initially expected to decline during the pandemic, but we actually saw an increase in both the quality and quantity thereof as they went mainstream. As insuretech startups began to partner with carriers, the importance of understanding what it means for an insuretech to “go mainstream” came to a head.

Moving into the mainstream doesn’t necessarily mean becoming a carrier. More often than not, it means partnering with a carrier to accelerate into an implementation phase, allowing testing and learning as well as raising the possibility of quicker time-to-value realization than would otherwise be possible.

Of course, as a financial relationship blossoms with an insuretech startup, as with any technology partner, potential changes in control have magnified implications for a carrier building out capabilities strategically. Plans must already be in place for a scenario in which a competitor or large vendor acquires an insuretech startup. Preparing to answer a question such as, “Will you be buying something from your competitor?” is an important aspect of laying out plans for changes in (financial) control.

Transitions in the Market

Numerous companies have expressed concerns about inflation, though it is typically accompanied by higher interest rates, which means it is not all bad for insurance carriers looking to asset/liability match for their financials. More pressing for most companies, however, are changes taking place in the labor market.

For many companies, a significant cohort with extensive experience and institutional memory is soon to depart. In contrast to that tail end of the baby boomer generation, younger employees are more ready to see business relationships as transactional. If they don’t want to think about finding a replacement as soon as someone is hired, leaders need to step back and think about what can be done internally to incentivize employee retention.

As remote work becomes the norm, it is easier than ever to transition jobs. Companies need to stay competitive in pay, benefits, and other incentives if they want to attract and retain high-quality talent from what is now a nationwide talent pool. In a more transitory labor market, knowledge management and processes for transference become increasingly critical for IT leaders.

To join the conversation, sign up for one of Aite-Novarica Group’s upcoming virtual or in-person events, or reach out to me directly at [email protected].

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