What Insurance Companies Need to Do

Abstract

Naylor provides a useful analysis and summary of what incumbent insurers need to do to survive the looming waves of disruptive technological innovations and the competition by InsurTech entrants. This is placed within the framework of innovation disruption theory and uses a number of industry studies. The chapter analyses each stage of the insurance process and outlines what is required. The insurance sector is seen as requiring a transformation in the way it views its output, in the style of management, and in its engagement with customers. The major theme of the chapter this that intensive end-to-end automation will transform costs of production. The chapter argues that combining this with telematic-based big data and AI analysis means that the current insurer model is likely to be outmoded. Naylor argues that the way forward is to transform insurance from a product-based model to a data-based service model. This will allow incumbents to survive and enhance profit streams. The chapter outlines how there will be a need for increased flexibility and rapid response to changing customer expectations. The chapter then lays out a series of transformation pathways. These will include being more actively involved with customers and creating a wider business ecosystem. The management requirements of moving to an AI data-based approach are explored. The lessons learnt from a number of successful and unsuccessful business case studies are integrated throughout.