{"id":62566,"date":"2021-03-11T14:00:00","date_gmt":"2021-03-11T19:00:00","guid":{"rendered":"https:\/\/staging.majesco.com\/?p=62566"},"modified":"2022-11-10T15:06:16","modified_gmt":"2022-11-10T20:06:16","slug":"insurance-innovation-invigorated-by-crisis","status":"publish","type":"post","link":"https:\/\/staging.majesco.com\/?p=62566","title":{"rendered":"Insurance Innovation Invigorated by Crisis"},"content":{"rendered":"\n

It\u2019s like a scene from an action-packed Marvel thriller! The threatened hero is being chased down the street but sees a route for escape. It\u2019s an alley. (We all know not to go down the alley, but the hero doesn\u2019t listen to us.) At the end of the alley there is a brick wall. (We all knew there would be a wall or a fence or an iron gate.) There\u2019s no way around the wall. Our hero is going to have to get innovative in a hurry, find and use their superhero capabilities!  They save the day.  Save people. Save the world.<\/p>\n\n\n\n

That\u2019s what COVID has done to nearly every industry. It chased companies into corners. It threatened their markets. It even built brick walls in perfectly good alleyways, separating unprepared companies from the customers they need.<\/p>\n\n\n\n

Sometimes, however, it is the crisis that makes the necessity become real. Think about it. The pandemic has obliterated any lingering doubts about the necessity of insurance digital transformation.  With rare exception, operating digitally is the only <\/em>way to do and to stay in business. It\u2019s \u2018go digital\u2019 or stare at that wall until the unthinkable happens. <\/p>\n\n\n\n

And this is where super hero capabilities come into play for insurers!<\/p>\n\n\n\n

Some insurers are leveraging their superhero capabilities. They are the Leaders<\/strong>. When COVID rewarded the insurance industry with the ultimate teachable moment, they took the lesson to heart. When something built a brick wall between them and their customers, they used innovation and transformation to make the wall irrelevant.  They are focused on today\u2019s business while also creating tomorrow\u2019s business \u2013 operating at speed with a multi-focus, unlike others.<\/p>\n\n\n\n

Some insurers are trying to keep pace or catch up. These are the Followers<\/strong>. Determined not to let the Leaders get too far ahead, Followers are listening to the lessons of COVID and they are launching new initiatives and making changes to ensure their success. They are solidly focused on modernizing and optimizing today\u2019s business; however, they are less focused on creating the future business. But, they are continuing to gradually fall behind.<\/p>\n\n\n\n

Some insurers are in a tight spot. They are faced with some tough dilemmas. These are the Laggards<\/strong>. Laggards generally understand the market dynamics but are clearly stuck in the past and have failed to rapidly move to planning and execution across the array of strategic areas \u2013 even for their business today. They are not moving to new cloud platform solutions, or incorporating platform and emerging technologies.  They are keeping their business solely focused on the past, rather than the future. If not already, they are approaching a downward spiral of relevance that will be nearly impossible to reverse.<\/p>\n\n\n\n

Majesco\u2019s 2021 Strategic Priorities first report<\/a>, based on post-COVID insurer survey results, shows a dramatically widening gap between Leaders and Laggards \u2013 64%, a year-over-year increase of 20%<\/strong> \u2013 when looking at their focus on key strategic initiatives in the past year. Followers were \u201ctreading water\u201d to keep even with the previous year \u2013 with a 12% gap to Leaders.<\/p>\n\n\n\n

To understand in more detail the widening gaps, the 2021 Strategic Priorities second report<\/a>, just published, assesses how insurers are dealing with necessary transformation in the midst of increasing challenges. In today\u2019s blog, we look at the details of this gap. What is it that Leaders and Followers and Laggards are doing differently? What can insurers do to make sure they are positioning to become or remain Leaders?<\/p>\n\n\n\n

Despite COVID Challenges, Leaders Widening the Gaps<\/h2>\n\n\n\n

The COVID crisis seemed to come out of nowhere, blindsiding the world with the force of a tsunami. Suddenly, the \u201cusual\u201d way of doing things no longer worked. Adaptability is the new innovator. For example, COVID-19 reduced or eliminated \u201cin person\u201d time for agents, adding a layer of difficulty to distribution. Those who were prepared to digitally shift for everything from communications to support lead generation through alternate channels and launch new products in spite of quarantines were in a better position to turn plans into actions.<\/p>\n\n\n\n

What Did Leaders Do Differently?<\/h2>\n\n\n\n

A key to reducing the drastic impact is the ability to rapidly adapt planning \u2013 both the plans themselves and the process for creating and altering them. Throughout history we often see that the difference between success and failure is related directly to the ability to evaluate, reinvent, and adapt to the current environment. While COVID forced companies to adapt, Leaders took advantage of the situation.  Leaders exercised their adaptability to a much greater degree than Followers (25% gap) or Laggards (34% gap), as seen in Figure 1. <\/p>\n\n\n\n

Figure 1: Impact of COVID-19 on annual planning<\/p>\n\n\n\n

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Leaders are also more in touch with COVID\u2019s potential internal and external impacts on their companies. Externally, their awareness of the impact to their customers was 26% higher than Followers and 33% higher than Laggards (Figure 2), a crucial insight and strategic difference between Leaders and those trailing behind them.<\/p>\n\n\n\n

Leaders know they can\u2019t assume the customers they serve today<\/em> will need or want the same products and services tomorrow<\/em>\u2026or that the same customers will even be there<\/em> tomorrow. Leaders are constantly monitoring the changing demographics and dynamics and making short- and long-term adjustments to adapt and thrive in an ever-evolving market. If their current target markets are negatively impacted by COVID, they know they need to adjust their product and service offerings, develop new channels, seek new markets, and more.<\/p>\n\n\n\n

The State of Insurers Last Year<\/h2>\n\n\n\n

COVID was a gut punch for all three segments in 2020. Leaders, Followers and Laggards all had setbacks in their companies\u2019 growth and strategic activities compared to 2019. On an aggregate basis, Leaders (-12%) and Followers (-10%) saw similar declines, but Laggards\u2019 (-24%) was twice the decline of Leaders, highlighting their unpreparedness for the crisis (Figure 2). In contrast, Leaders\u2019 response was to counterpunch and adapt with new approaches to planning underpinned by a greater awareness of the business implications.   <\/p>\n\n\n\n

Awareness and adaptability matter when responding to change.<\/h2>\n\n\n\n

Figure 2: COVID-19\u2019s impact on growth and strategic activities last year<\/p>\n\n\n\n

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Despite the setbacks of the last year, Leaders continue to dominate with a 12% lead over Followers and a striking 64% lead over Laggards, as seen in Figure 3. <\/p>\n\n\n\n

Leaders and Followers were nearly identical in their views of company growth during the previous year, but Leaders averaged a 15% gap over Followers on all the other factors. The largest gap (21%) was in Maintaining\/Replacing core systems<\/em> and the smallest (12%) was in a new factor added this year, Allocating resources to business as usual\/change how we do business<\/em>. <\/p>\n\n\n\n

Figure 3: Gaps between Leaders, Followers and Laggards in assessments of company growth and strategic activities last year<\/p>\n\n\n\n

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Digital Disparity<\/h2>\n\n\n\n

However, the huge gap between Leaders and Laggards was due to four key factors reflected in Figure 3 \u2014 all of which are linked to digital transformation and creating the business for the future:<\/p>\n\n\n\n