The L&P insurance industry is being challenged by multiple disruptive forces functioning together to nudge the industry toward undertaking front-, middle-, and back-office transformation. First, there are growth opportunities in certain product classes; however, L&P insurers need to embrace product customization, simplification, and flexibility to capture those. Second, regulatory compliance costs are continually ballooning with additions or updates in regulations, and lean and digital operational strategies are required to tackle those. Third, InsurTechs have been challenging insurers to rethink their operations and customer outreach. Lastly, strategic M&As in the industry continue to impact the competitive landscape.
Transformation, however, is a herculean task for an industry that is running on archaic technology infrastructure, siloed systems, fragmented & distributed business units, and reserving complexities. Thus, while a complete transformation could be unachievable in the near-term, L&P insurers still need to undertake small executable steps that would collectively enable achieving long-term structural transformation goals.
Under these circumstances, insurers are addressing their internal challenges through different ways. Some of these measures are more reactive in nature such as exiting or divesting capital-intensive and loss-making businesses, while some are more proactive such as establishing innovation labs and investment units that scout for digitally proficient InsurTech firms in the ecosystem. However, this is still not an industry-wide scenario and only a few players have opened themselves to requisite adaptations, thus rendering them a competitive advantage. Those insurers still struggling to implement digital interventions have an opportunity to engage with BPO service providers and leverage the latter’s digital technology capabilities, implementation experience, and domain expertise to safeguard and strengthen their market position
