Insurance industry leaders forge collaborative business solutions

Suppose you got the chance to see into the future. What would risk management and commercial insurance look like?

Some industry insiders paint a dystopian picture: The insurance industry is out of date and out of touch. Digital disrupters and alternative capital mechanisms are shifting business away from insurers. Third party intermediaries become less relevant as businesses work directly with their risk partners.

We’re wading through a data deluge, but our legacy infrastructure keeps us from capitalizing on opportunities to leverage that information, and artificial intelligence is ready to automate our jobs away.

Are we facing the specter of irrelevance? Or, is this a time of opportunity?

A group of colleagues across insurance and industry risk management disciplines recently came together for a Design Thinking workshop to ideate around the future of risk management and insurance. Our goal: Identify solutions that propel our collective organizations forward.

Related: Solving the insurance innovation equation

About Design Thinking

Design Thinking is a human-centric design methodology that helps us identify innovative solutions to solve complex challenges. Design Thinking is extremely useful in tackling complex problems that are unknown or not well defined. Through the Design Thinking process, we seek to understand needs through conversations by reframing the problem in human-centric ways, by generating many ideas, and by adopting an action-oriented focus through prototypes and experimentation.

Starting at the beginning

Through a series of one-to-one interviews, the teams uncovered areas of rapid change and opportunity to shape the future landscape. They came up with four themes for further exploration, including:

The speed of change — Participants identified this as both a threat and an opportunity. Keeping up with technology, ensuring our workforce has the skills to compete, managing expectations in a customer-centric world, and providing the creative space, structure and resources to innovate were primary concerns.

Climate change — Participants identified climate change as an immediate and future threat. The increased severity of natural catastrophes, loss mitigation and environmentally sustainable development were top of mind.

Digital, supply chain and cyber risk — As our businesses become more digital and hyper-connected, we risk exposing data and intellectual property to potential bad actors. Keeping data safe now challenges most organizations. On the upside, digitization results in an enhanced ability to communicate and collaborate with others. The global interconnectedness of our businesses creates new risks, exposures and opportunities.

Insurance relevancy — Participants expressed concern about the industry’s ability to keep pace with product innovation. One area of opportunity was developing insurance products to insure non-tangible assets, critical in a digital world.

Related: Insurers worry a financial crisis may come from climate risks

Digging deeper

• The group then posed important questions: How do we encourage global collaboration across industries?
• What’s the role / social responsibility of corporations to affect meaningful change in the world?
• How do we reduce bureaucracy in our organizations and challenge complacency?
• How do we stay relevant for future generations?
• How do we partner (and who do we partner with)?
• How do we create response strategies for things we don’t understand?
• What are the skills of the future and how do we close the gap?
• Where does the gig economy fit within our business models?

Problems worth solving

As ideas began to take shape, we uncovered insights that became a list of “problems worth solving.” They included:

• Addressing the environmental hazards that are changing our planet
• Evaluating ways that we can balance regulations with third-party risk exposure
• Identifying ways to reinvent ourselves to stay relevant
• Creating a mechanism for identifying and addressing emerging risks
• Developing longer-term insurance solutions to create “contract longevity”
• Broadening the insurance business to anticipate future client needs
• Creating internal space, time, resources to explore new innovation opportunity areas
• Automating the ordinary
• Identifying new data sources and designing accurate, inclusive data sets to provide risk intelligence
• Staying relevant and profitable

Exploring solutions

Design Thinking isn’t just about coming up with innovative ideas. It’s taking the best ideas and putting them to work as prototypes. At the final stage of the workshop, teams created prototype solutions within their groups. As the teams reported out, we discovered a high level of convergence around the themes of trust, collaboration and networking.

Here is a summary of the four bold solutions presented by the groups:

Forge a culture of innovation. This team recognized the need to drive and sustain more innovation capabilities within and across organizations. As part of creating an innovation culture, the team addressed streamlining organizational structure, identifying skills of the future and creating mechanisms for upskilling existing employees and creating a next-gen talent pipeline, and creating an organizational culture that’s adaptable, flexible, and responsive.

Develop and deepen partnerships. In this partnership model, clients engage with the insurer to jointly solve risk problems and share information and expertise. This would allow clients to better benchmark against industry practices while also providing the insurer with industry domain expertise through the exchange program. The value would be in strengthening relationships, building a better understanding of client needs, and co-creating innovative solutions. Capabilities could include advisory services & benchmarking and an exchange program with external employee rotations.

Build long-term product relationships. Large insurance clients have a longer-term planning horizon beyond the traditional one year contract period. For strategic relationships, this team envisioned a ten-year contract period for a bespoke insurance product tied to the client’s financial performance, allowing the insurer to share in the upside as well as downside outcomes: “We mostly insure tangible assets, but the real value is in the non-tangible.” This concept rewards longer-term thinking.

Design for the greater good — With the impact of climate change dramatically impacting the world and governmental organizations struggling to address the challenge, this team envisioned greater corporate / industry collaboration in designing environmentally sustainable businesses.

Related: Why partnership is the future of insurance industry growth

Better together

Overwhelmingly, this group of insurance professionals focused on solutions that brought carriers and risk managers together in the co-creation and design of new ways to jointly address the business challenges we’re all facing.

The group defined mechanisms for collaboration and partnership. We also were passionate about working together to ensure the continued sustainability of our planet, our companies and our workforce. One of the participants quoted the American civil rights leader, John Lewis, in spurring the group to action by saying: “If not us, then who? If not now, then when?”

Related: Insurance industry players need to come together — right now

Rachel Alt-Simmons (rachel.altsimmons@axaxl.com) is head of Business Architecture and Design at AXA XL.  She also is the author of “Agile by Design: An Implementation Guide to Analytic Lifecycle Management” (Wiley, 2015).