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Insurance Industry:: Innovation, transformation or failure

Wednesday, 16 January, 2013 3 Comments

If you have visited my blog before you will already know that I have spent some considerable time researching and commenting upon a wide of topics that, although many within insurance fail to see the connection, are related directly related to the insurance industry.

In truth, my work was initially prompted by concerns (a deep dissatisfaction may be more appropriate!) about how the insurance (particularly broking) operated: structure; culture; regulation; remuneration levels; use of IT; cover; pricing of RISK. It was only as I delved deeper into the subject matter, a form of ‘root cause analysis’ [RCA] – causality being particularly pertinent to insurance! – that I came to fully appreciate HOW DANGEROUSLY LIMITED the understanding and application of a probability-based assessment of risk truly was. Especially when the business environment has, fundamentally and irrevocably, changed.

If a future event will take place, it will do so irrespective of the probability that we may have attached to it. If an extremely unlikely event will happen, it’s probability of occurrence is already 100%

Having been introduced to Complexity (by Dr Jacek Marczyk, Founder of Ontonix srl) and it’s relationship to risk and uncertainty my RCA led me to investigate from a (more rigorous) scientific and mathematical perspective. Eventually into the realm of the behaviour of Complex Systems and, inevitably, to Systems Thinking. Gradually, the understanding, that comes from viewing life and work through the Systems lens, revealed that much of what is wrong with Financial Services stems from unnatural interventions.

The certainty of uncertainty

Sunday, 6 January, 2013 Leave a comment

When the business of a business is pretty predictable, as it was in the Industrial era, there is less need to focus on resilience or responsiveness. In the old days, business could undertake planning exercises and be reasonably safe in the knowledge that the functioning of the business would be able to successfully execute its plans and that the environment would not impinge too greatly on those plans. In the modern era where knowledge is “a core commodity and the rapid production of knowledge and innovation is critical to organisational survival” (Bettis and Hitt, 1995, ‘The new competitive landscape’), business needs to get to grips with the reality of uncertainty and decreasing forecastability. Businesses also need to remember that they are living systems within wider living systems. Global environmental, political, economic and financial challenges all impact on a business’s ability to succeed.

quantum shifting

Sometimes you read something that really strikes a chord. I recently saw this quote from Kurt Vonnegut: “We have to continually be jumping off cliffs and developing our wings on the way down.” In other times, I would read this and it would simply seem like a poetic truism, but I’m currently experiencing a number of shifts in my personal situation which made me read that quote as if it was written just for me. These shifts are creating a fair amount of uncertainty and bringing up all the associated emotions that go with it. In times like this, it is useful for me to remember that trying to control what is going on in my world will not lead to the best outcomes and in fact, that I need to call on the kind of resources that will best keep me going in times of uncertainty. These resources, in…

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Filed under Complexity, Innovation, Risk, Uncertainty Tagged with adaptability, Business, Digital Age, Industrial Era, John Wenger, Knowledge Management, Living systems, Systems Thinking

When Hiscox talk about credibility others should listen

Thursday, 6 December, 2012 Leave a comment

This is a topic that I have been going on about for AGES and I could have (but didn’t) write the article I have included below. I have oft quoted the Annual Edelman Trust Barometer. But, as Annabel reiterates, the industry’s understanding of their own marketplace is so poor that they would rather SPEND on telling you that they care rather than INVESTING to demonstrate it: RHETORIC WILL NOT RESTORE TRUST, for it does not facilitate transparency!!!

If ever you wanted evidence that an industry doesn’t listen to those that fund it, this is it. Insurers and brokers clearly understand competition and their prevailing model but struggle with the concept of how to move to a new (better) model that is fit for the Digital Age and future financial landscape. One that offers demonstrable customer value: NOT ambiguous strategies, unsustainable pricing and unjustified commission levels.

“It is easier to understand that you face competition than obsolescence”

CHANGE WILL HAPPEN. Business systems that, for whatever reason, fail to adapt to a rapidly changing environment are extremely vulnerable. Those that aren’t embracing and benefiting from meaningful two-way interaction across their business ecosystem, will make it easier for new models to gain the foothold they need to, initially, survive and to thrive in the coming years.