Take a look at the financials of the insurance industry andindustry projections, and it may seem like business as usual.

But peek just under the surface at many insurers and you'll finda great deal of activity aimed at transformation— positioning for success in the rapidly changing digitalworld. Typically, this activity takes the form of strategicinitiatives — major enterprise-wide programs that requiresustained commitment and investment.

SMA has just released a new research report identifying thesestrategic initiatives, "Insurers' 2016 Strategic Initiatives: AdvancingIndustry Transformation." The report covers thepriorities of these initiatives, sources of funding, and their rolein helping insurers attain the future as a Next-Gen Insurer.

SMA research reveals that the top strategic initiatives remainvirtually the same as 2015 — customer experience,analytics, new products, and core replacement. This is anindication that the commitment to transformation aligned with thesefour initiatives is rock solid. However, the manner in which theseinitiatives are being funded is changing — with morefunding coming from new sources outside the IT budget. In 2015,about a third of the funding for strategic initiatives cameexclusively from capital investments. In 2016, funding from newsources will increase to over 40%.  

Entering a new digital era

These are the questions to explore — Why change? Whyall the investment and resources devoted to rethinking andreshaping the company? The answers are straightforward— many recognize that we are entering a new digital era,with technology rapidly advancing and in the hands of customers andcompetitors. Emerging trends such as the sharing economy, alongwith the rapid adoption of technologies such as cloud and mobileare creating new opportunities (and risks) for insurers. In fact,SMA predicts that the introduction of new products, businessmodels, and business optimization will accelerate as insurersleverage maturing technologies and capitalize on emergingtechnologies such as wearables, the "Internet of Things," drones,and others. Technology really is driving a lot of the conversationand action at senior levels these days.

Ultimately, many insurers have a vision of building a companythat is agile and able to respond rapidly to market opportunitiesand threats. The common threads running through the strategicinitiatives are the need to be digital and the key role ofinnovation. Although not the end games in and of themselves,digital and innovation are the enablers thatform the foundation for future success. SMA has created theNext-Gen Insurer Model to describe what the future insurancecompany and what future success will look like. The twelveinitiatives that many insurers are pursuing are the mechanisms thatinsurers are using to become Next-Gen Insurers. There may be choppywaters under the visible tip of the iceberg, but the activity isvery focused and taking individual companies and the industry as awhole in a new direction. In the not too distant future— within five years by our estimate — the visiblepart of that iceberg will change as well, and a new industry willemerge.

For more information on the insurers' strategic initiatives andthe industry transformation underway, contact Deb Smallwoodat [email protected]. 

Editor's note: This article first appeared onStrategyMeetsAction.com and is reprinted here with theirpermission. Click here for the originalpost.

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