A turning point
How many products and services would be the same if they were designed from scratch in 2018? Many of the things we use on a daily basis – cars, phones, the internet, etc. – would no doubt stay essentially the same… but not life insurance.
It is no secret that delivering life insurance products is too often a bureaucratic and onerous process out of step with the expectations of the digital era. It is no wonder then that insurance ownership is down in mature markets all over the world. In the U.S. alone, life insurance ownership has consistently dropped over the last 30 years, from 77% in 1989 to below 60% in 2018.[1]
Reasons for this drop are various and complex, but one thing is certain: any highly profitable industry that fails to live up to its potential is ripe for disruption. Would-be disruptors will include a myriad of new entrants willing to do whatever it takes to capture their share of future business opportunities.
Clayton Christensen, author of The Innovator’s Dilemma and founder of the theory of disruptive innovation, warns that one of the primary risks to incumbents from disruptors comes via specialization and efficiency. New entrants gain a foothold in the market by catering to consumers largely ignored by established firms and can streamline delivery by focusing only on the most profitable customer segments. This foothold can turn into momentum as new entrants experience success, collect consumer data, and develop new products to serve additional cohorts of lucrative customers, thereby further eroding the established firm’s market share. The process can happen so gradually that existing players hardly realize what is happening until it is too late.
But to what degree should new entrants be leading the charge in insurance innovation? For that matter, are superlative terms like disruption and re-invention even the desirable path forward for this industry? In industries like social media, a term that didn’t even exist 25 years ago, new entrants can readily punch above their weight class as markets change with the mercurial whims of digital consumers. However, sectors like insurance are required to deliver value over longitudinal timelines yet unrealized by Silicon Valley startups – and do so within regulatory environments that would make even the boldest entrepreneur blanch.
So, what is the ideal path forward for companies interested in achieving sustainable success in the life insurance industry? Not a disruption, but rather a transformation. By pursuing the goal of transformation, established firms with invaluable expertise can leverage new technologies to creatively restructure resources and methodologies to better meet the needs of today’s consumers.
Empowering the incumbents
As a Fortune 500 reinsurance company, RGA has been a global leader in the life insurance value chain for over 40 years. That experience has given us a deep understanding of the challenges facing the industry, as well as the innumerable opportunities yet to be realized. We believe that every supposed barrier to innovation represents an opportunity for incumbents to step up and guide the conversation with the new players.
RGAX, the transformation engine of RGA, is putting this belief into practice. Our services are designed to facilitate carrier participation in the most exciting innovations of the day without the need for heavy capital investment. We are equipping our partners with top-tier talent and cutting-edge approaches while connecting carrier clients with resources that will empower them to lead transformative change – all tailored to their respective cultures and business priorities. Examples include:
Entrepreneur in Residence (EIR) Program
RGAX works with a broad network of successful entrepreneurs from all over the world to source creative approaches and experienced delivery models. Partnerships brokered by RGAX between EIRs and established firms have succeeded in delivering real solutions to market with active, growing user bases. Learn more about our EIR program.
Data and Analytics (D&A)
As a reinsurer, we share our clients’ desire for quantitative decision-making while maintaining the highest standards in compliance and security. To better meet the growing demand for data solutions uniquely suited to the needs of insurance companies, RGAX has assembled a team of actuaries and data scientists with decades of industry experience whose purpose is to listen to the market’s needs and work with our partners to realize new solutions. To date, we have commercialized models that enhance target marketing, automate risk assessment for accelerated underwriting, improve pricing strategy on commoditized products, and more. Whether getting more out of existing data or augmenting the clarity of insights with new sources, RGAX can help increase the efficacy of an insurer’s data strategy and accelerate market performance.
Cookhouse Lab
Based in Toronto, Cookhouse Lab is a one-of-a-kind open collaboration space that allows thought leaders and industry experts to come together to solve the toughest issues facing the insurance sector. By joining one of our accelerated innovation sprints, participants from different companies share insights through guided exercises in design thinking and lean startup methodologies to develop a business case and a Minimum Viable Product. Contact us directly to learn more about Cookhouse Lab.
Innovation as a Service (IaaS)
We are finding that more and more of our partners are ready to develop and launch new market solutions, though they aren’t always sure how to proceed. Any entrepreneur will tell you the gulf between idea and execution is wider than most of the people in the board room care to admit. This is where our Innovation as a Service practice comes in. Whether a company has identified a problem to solve on its own or through a sprint at Cookhouse Lab, we provide end-to-end capabilities for a disciplined path to market regardless of the starting point or objectives.
Contact us today to learn more about how RGAX’s portfolio of solutions can help your business.
Re-thinking re-invention
RGA launched RGAX to transform life insurance. As a leading global reinsurer, we are committed to remain a stalwart ally of our client base and steward of the industry. We believe that, through partnership, established players in the life insurance industry can ride the wave of disruption without being swept away by it. By connecting established expertise to the talent and tools of tomorrow, together we can re-invent insurance without re-inventing the wheel.
[1] https://www.bloomberg.com/view/articles/2018-02-27/the-decline-of-life-insurance-is-a-mystery
