Talking about cloud solutions is kind of like watching QVC. The product will actually do the 30 things you need it to do. Demand for it is high, and the window of opportunity may expire in the next 12 minutes.
Twelve minutes may be an exaggeration, but there is certainly a heavy, time-sensitive weight upon C-level executives. They worry over market opportunity loss. They live under the knowledge that some great opportunities exist for a limited time. And they grasp the necessity for innovation and improved speed to market. The real mind-numbing weight, however, is that to meet all of these challenges, they can’t just pick up the phone and order their solution.
Taking a deeper look at the high-pressure ingredients, one is struck by cloud solutions’ abilities to actually, creatively, quickly meet a new era of broad insurance demands and opportunities. A cursory look at the landscape may shed some light on how a cloud-based insurance business platform is an excellent fit for many of today’s new insurance business scenarios with few hurdles to acquisition and implementation.
For the past three years Travelers has conducted a survey on consumers’ perceptions of risk in their daily lives. The results of their 2015 Consumer Risk Index suggest that we think it’s a pretty risky world out there. In all three surveys a majority of people said the level of risk to their well-being has been increasing.
Travelers’ research showed that the top concerns are:
- Financial security
- Personal privacy loss and identity theft
- Cyber, computer technology, data breaches & risks
- Personal safety
- Extreme weather and natural disasters
- Transportation and travel
- Food safety
What should insurers do? Insurance companies are in the business of risk management and have helped consumers protect the big risks – homes, vehicles and their lives. What this survey indicates, however, is the potential emergence of new consumer niche needs that are not being addressed with today’s traditional products. These needs require product innovation for new market segments that can be developed and tested quickly without the constraints of the traditional business operation. It demands a green field or start-up approach leveraging cloud business platform often called “core insurance in a box.” These new risks are perfectly suited to this approach and offers insurance CEOs the elusive agility, innovation and speed needed in today’s fast-paced, changing market.
Silicon Valley gets a lot of attention for entrepreneurialism, but it is not the only place where new businesses and new models are emerging rapidly in the market. Consider Zenefits, GoBear.com, Bolt, and compare.com to name a few in the insurance market. While net new business formations have declined since the recession, the millennial cohort is poised to reverse this trend due to their huge size and interest in being business owners. A 2014 study by Bentley University (as reported in Forbes by management writer, Rob Ashgar) found that 67% of this cohort indicated their career goals involve starting their own business.
We also know that this younger generation is the driver of new expectations for digital interactions with others – individuals and organizations. That’s how they’ll set up their businesses and that’s how they’ll expect to interact with their customers, partners, and suppliers. This group is technology savvy…having grown up with technology in all parts of their lives. They don’t mind “sharing assets” rather than buying new, if it accomplishes their goals with fewer hurdles. Hence, this generation will take advantage of cloud-based business options that require no infrastructure costs and are a “pay as you use” option in order to focus on the end results.
“Add in that it’s easier than ever to start your own business.” writes Ashgar, “As one VC told me not long ago, the infrastructure of a corporation has been ‘uploaded into the cloud’ in a way that any solo entrepreneur can put to use…quickly and easily.”
What types of businesses will these new entrepreneurs open? There are some interesting articles in the business press that spark the imagination but could also challenge the insurance industry to develop the unique coverages they might require.
For example, Inc. listed these eight industries as most promising for starting new businesses in 2015:
- Food E-commerce
- Legal Marijuana
- Gamification Services
- Agricultural Software
- Relaxation Beverages
- Hardware and software for government agencies
- Yoga and Pilates
- Fantasy Sports Services
Some of these might give you pause, but read the article to see what Inc. has to say about them. Agricultural software, for example, has the potential to dramatically change business dynamics for agriculture by maximizing production, distribution and profitability. What are the implications for agricultural insurance? Will farms and other agriculture businesses expect different pricing if they allow access to the wealth of crop data? For some more interesting ideas, check out these articles from Business News Daily as well:
In each of these there are a wealth of new ideas that have new or different risk parameters, new customer needs and expectations and most importantly a wealth of new data to assess and underwrite the risk. Together all of these examples highlight the exploding new business models and niche product needs that will require new, innovative products and services. For traditional insurers to simply test these products on core legacy systems could take longer than a full-blown launch with a cloud insurance business platform approach. The cloud’s agility, innovation and speed make it the great enabler.
New risks and new opportunities are only valuable while the window of opportunity remains open. Market windows open and close continually. The 21st century insurer will be adept at timing the market with rapid risk assessment and fluid product development and testing. Will insurer core systems be agile and content rich enough to quickly develop, introduce and test new products in 30 or 60 days versus 6, 9 12 months?
The traditional insurance product development process has been painfully slow due to many factors. When insurers look at the complexity and ineffectiveness of legacy systems, the allocation of resources to legacy modernization, the desire to have the product fully functional end-to-end and “perfect” before market introduction, they encounter a process that is dramatically mis-matched with the reality of the current business environment. In today’s world you can’t wait until everything is perfect before customers render their verdicts. Opportunities emerge too quickly and new competitors don’t wait for perfect!
Insurers can take a page from the Millennial entrepreneur playbook mentioned earlier to gain the speed and agility needed to take advantage of these. A cloud insurance business platform meets the need for speed with a fully-functioning, industry-proven, cost-effective, ready-to-use, quick-to-implement approach. It answers open windows with ready products. It gives the C-level confidence in the possibilities for growth. It is no wonder, then, that cloud solutions are in high demand.
Those who can capture the potential of these opportunities are shifting and realigning fundamental elements of business and leveraging the unique ingredients for growth: Worry, Optimism and Speed to create new business models, incubate new products and more. The cloud can provide clarity and simplicity to move forward, freeing executives and the business from traditional hurdles and replacing the business with not only new methods, but a new mindset.
Cloud-based insurance capabilities allow insurers to creatively brainstorm ways to capitalize on new risks, innovative new products and new markets; to explore the possibilities that come when new foundations align to meet unexpected opportunities. Is it real? Yes…Majesco is working with many existing and new insurers to take advantage of the capabilities of a cloud insurance business platform …helping them innovate and leverage new opportunities to fuel their growth strategies. Are you worried about your competitive position? Do you feel optimism for growth opportunities? Do you want to achieve speed to market? If so, look at a new approach for growth with a cloud insurance business platform.