“The potential for the consumer-facing insurance markets is being driven by a massive confidence and behavior change in consumers, all online,” Smith said. “Insurance is one of those products that can be completely satisfied over the Internet—there aren't many product or service areas where you can actually do that.”

He added that insurers now need to “move from clunky, annual, impersonalized relationships linked to that renewal and/or a catastrophic event, to something that's much more personal and improving of life.”

Smith maintains that the insurance industry model is based on an essentially antiquated idea, which sorely needs revision to adapt to today's new realities.

The old model, he said, “is paying money that I don't want to pay, and then I'm not sure the claim will be paid—even the language of 'claim' expresses doubt. The other way is something saving me from personal injury or loss of possessions—there's all manner of services that can be offered to the customer.

“Insurance will move from compensation for loss to prevention of an event. The more interesting stuff is when it becomes preventative, reducing risk in the process. With the 'Internet of things,' you can have real-time information: you can get a ping saying don't take this route down the street, this pizza parlor has had three robberies in the past two months, this one is safer, or you can have real-time cameras in the car”—Smith added that two Japanese insurers are already experimenting with such innovations.

In order to do this, and in order to face up to changes in lifestyles, consumer expectations, and the global economy, insurers will need to leverage IT in ways they've so far been slow to take up, according to Smith. For industry leaders, this will mean doing more with their own IT budgets, and encouraging, rather than stifling, the innovative and entrepreneurial impulses—and people—within their own companies.

“In a lot of insurance companies IT is held together by chewing gum and a string,” Smith said. “It's a very difficult world to change anything, and we're not really that connected yet. It's reasonably customer centered in some cases; some [companies] have got all their channels aligned, some haven't. So technology is the enabler and it's the barrier.”

Smith cited a Gartner report stating that in the insurance industry only 30 percent of IT spend remains after operational costs are accounted for—which means very little money left over for technological innovation relative to the overall investment.

“People are fantastic at deriving value out of the business and protecting it, but less able to embrace new things where they don't have the experience [to know] whether or not they will work out,” he explained. “Ultimately it's about people, attitude to risk, and propensity to look out there, absorb social, technological, and political change, and articulate that to the organization in a way that senior folks feel comfortable investing in possible futures.

“People who get it—we call them entrepreneurs. Most companies want managers to become leaders, but you want entrepreneurs, managers, and leaders. You need a mix of all these folks—you can't just keep firing the entrepreneurs when they get too disruptive.”

Finally, Smith maintained that in order to survive and grow, insurers must have a high-level vision, not only of what's in front of them but of the big picture, and how it's changing moment by moment.

“It's incredibly dangerous in periods of high change to not have a vision,” he said. “If you don't you'll be a Kodak in no time—you get it, you understand the change that's happening, but you do nothing about it because you don't know how to deal with it,” allowing your business to be eclipsed by new technology-enabled business models.

“People are hungry for change, and doing nothing is no longer safe—it's probably the riskiest thing you can do. If you're not changing business models fundamentally, then you're not changing. That's insurance.”