The insurance industry is undergoing a fundamental transformation. Insurers, agents and brokers are grappling with rapidly evolving risks that are becoming increasingly complex. These waves of change include litigation, regulation, shifting causes of risk, escalating loss costs, evolving types of loss, and new causes of loss. Unfortunately, these challenges are expected to intensify.
Insurance and broker executives face a critical strategic question: how can they continuously calibrate their business to compete amidst growing uncertainty, new risks, and structural economic changes? Traditional models are proving inadequate, and simply updating them won’t suffice. To get ahead in this new reality, the “fix” needs to be as transformative—even more so—than the transformation of the industry itself. The solution lies in gaining new capabilities developed to help you outperform today and evolve with the innovation of tomorrow.
We’re Facing an Escalating Risk Trajectory
The traditional operating models used by brokers and insurers are under sustained pressure, hampering their growth opportunities and putting strain on all areas of the business. Insurers face challenges such as loss of revenue due to market withdrawal, mounting loss ratios, tripling reinsurance costs, new insurance models entering the market, and fierce competition from new entrants. Brokers are dealing with slowing M&A activity, changing commission structures, a messy mix of systems and processes, and high producer validation lag times.
Both insurers and brokers are grappling with a common set of escalating problems. Customer loyalty is eroding, the workforce is aging, and the industry struggles to recruit new talent. The sector is hamstrung by antiquated technology, legacy system issues, and business processes that are not fit for the modern era. Additionally, artificial intelligence (AI) has the potential to radically transform insurance, offering massive time and efficiency savings, but the rapid pace of technological change makes it difficult to predict its impact or place the right bets.
Read more about the dynamic risk landscape in Zywave’s special report: Navigating the Escalating Risk Trajectory.
The Immediate Need for Change
It’s clear that most insurers, agents and brokers are not well-equipped to handle today’s complex and rapidly evolving risk environment. They face an escalating risk trajectory of societal, climate, structural, and market dynamics that are becoming increasingly complex. Causes of loss include climate, agriculture, pollution, fraud, and pandemics. Types of loss encompass cyber, data breaches, ransomware, and liability. Costs of loss are driven by repair costs and higher supply chain disruptions. Factors of loss involve more data to evaluate risk and emerging technologies, such as blockchain, crypto, biotech, and AI. Regulation struggles to keep pace with the speed of technological change, leading to tighter rules and more supervision. Litigation is on the rise due to new challenges from technology and uncertainty about liability.
In this intensifying risk trajectory, outperformance won’t come from raising premiums, acquisitions, or continuing with business as usual. Today’s models are built for a bygone era. Leaders must embrace change or risk being left behind.
The Need for a Performance Multiplier
A great deal of insurance technology is obsolete. Traditional insurers and brokers have invested heavily in outdated, monolithic technology such as large agency management systems (AMS) for back-office functions. They have not invested enough in new technology that automates the processes and services critical for organic growth—because they haven’t really had to… until now.
Today’s winners will be the insurers and brokers that gain a Performance Multiplier–transformative, ecosystem-wide capabilities that amplify the impact of data, processes, people, and customer experiences. This will enable them to answer some of the toughest questions they face:
For Insurers:
- What new types of risk should we write and where?
- Which distributors drive the most value? How can we build deeper relationships with them?
- How can we outperform loss ratio targets?
- How can we better assess, place, and appropriately price risk?
- How can we deliver a compelling policyholder experience and become an insurer of choice?
For Agents & Brokers:
- How can we differentiate services to grow our book of business?
- Where are new opportunities, and how can we capture them with current resources?
- How can we harness data to identify and close the right cross-sell opportunities?
- Where can we streamline, standardize, and centralize to gain efficiency and unlock M&A value?
- How can we create a high-performance sales culture, serve clients better, and become a broker of choice?
What It Takes to Gain a Performance Multiplier
There are 5 success criteria that will drive profitable growth in a world of escalating risk. Our blog series will explore and explain them all and enlighten readers on how to unlock their own Performance Multiplier. Along the way, you’ll learn how to:
- Get risk right
- Unlock peak efficiency
- Elevate teams
- Be the preferred choice
- Bolster ecosystem strength
Gaining a Performance Multiplier through Zywave is the key to driving profitable growth in an escalating risk landscape. By fortifying data and content foundations, unlocking peak efficiency, elevating teams with AI-powered tools, delivering rich, modern experiences, and bolstering ecosystem strength, insurers and brokers can navigate the complexities of today’s market and emerge as leaders.
Stay tuned for the next blog in this series, where we will delve into the first criterion for gaining a Performance Multiplier: fortifying your data and content foundation.
REMINDER: To read more about rising risk, check out our special report: Navigating the Escalating Risk Trajectory.
