This is the 1st in a 3-part series on change management in the insurance industry.
InsurTech’s impact on the insurance industry is undeniable.
Between the years 2011 and 2015 investments in Insurtech jumped from $140 million to $2.7 billion, an over 95% increase in just four years. For those that focus on distribution, 75% of them have worked to make products available at the customer’s convenience, easily providing comparisons, and making the purchasing process simpler. The digital revolution has reached the insurance industry.
Companies that fail to adapt to these changes risk falling behind their competitors and missing out on growth opportunities. When looking at change management the classic example that comes to mind is Blockbuster failing to adapt to the online generation and getting crushed by Netflix. This is obviously an extreme example but it is one that very effectively showcases what can happen if the incumbent fails to embrace change and to disseminate it throughout the organization.
The InsurTech revolution is necessary for the insurance industry’s survival, and we’re now seeing that the industry is opening up and beginning to embrace InsurTech enablers. A 2019 study by LIMRA and BCG on what life insurance executives are most concerned about showed that 32% list change management as their greatest internal challenge, but that they are tackling it head-on.
Change management is defined by LIMRA as the “actions that equip companies to successfully manage any kind of transformation, with a focus on people, processes, and technology.”
As an entrepreneur and startup guy, I can’t pretend to have experience working in large organizations undergoing change management. However, as the CEO of an InsurTech that is being implemented by these organizations, I have witnessed first hand what happens when new technologies are introduced into teams and organizations. I don’t intend for this series to be a how-to guide on change management, but instead to speak to what is a big driver behind it and specific audiences that need to be on board to successfully navigate the transformational change that InsurTech can cause.
We’ve seen that most employees aren’t truly resisting technical change, but rather social change. They worry about losing their jobs, how their relationships with co-workers will change, or about the difficulties of learning new processes or technologies. Employees at every organizational level are motivated differently and if this isn’t recognized then new solutions won’t be embraced.
Anytime an industry goes through a massive transformation, there will be resistance to change. This has been true since the Luddites and the Industrial Revolution. It’s no wonder that “two-thirds of large-scale transformation efforts fail.”
According to LIMRA, executives know that they need to have the right people in place to ensure that transformation can be achieved smoothly and that new technological abilities translate into business-wide benefits. The most successful implementations that we have been part of have come from the C-Suite recognizing the importance of people and highlighting internal champions who have rallied teams around them and helped all business lines see the value of the change.
Stay tuned next week as I dive into how becoming consumer-centric is a central driver of change management and how to get your advisors and other stakeholders on board.