The insurance industry has a challenge to keep ahead of the constantly evolving risk environment. Whether it is the rise of cyber risks, increasing extreme weather events, or the rapid emergence of intangible assets and the difficulty in valuing such assets.
Executive SummaryAs the risk environment in insurance is constantly evolving, it's becoming increasingly important for insurers to have the right tools to keep up, according to Chris Cooksey, senior director of advanced analytics at Guidewire Software. In this article, he outlines steps and best practices insurers can take in order to remain competitive in the field. He lays out a three step plan for insurers to win in the data and analytics arms race and begin transforming their legacy systems of record into innovative systems of insight.
Some carriers thrive and prosper amidst these challenges. They find new ways to innovate and new opportunities in a changing environment. Others decline under the pressures, whether by a major miss on a strategic issue or via slow decline by being too cautious and too predictable.
Any experienced insurance executive can tell you a story or two of how a once strong carrier devolved to obsolescence, or how a once middling carrier grew rapidly based on one strategic decision or innovation. But it is not just anecdotal, there are detailed analyses that show innovators thrive and grow in the insurance industry.
According to a recent study by McKinsey, “insurance market shapers” — those who boldly innovate — create significantly more economic value than their peers. According to McKinsey, on average, these “market shapers” make up the top 20% of the market and create profits up to twenty times the industry average.