Everywhere around us, it seems that change is in the air. Some of it is weather-related, with epic snowfall hopefully putting a significant dent in the drought conditions in the Western United States. With any luck, this is a situation where short-term pain will lead to longer-term gains. The insurance implications for some lines of business could be profound, if we can get away from wildfire dangers and adverse impact on crops, to say nothing of the daily lives of people in the stricken zones.
In the technology world, the push for life, annuity, and benefit carriers to modernize core systems has also taken on new urgency. Cost and competitive pressures continue to mount, and new technologies offer some intriguing opportunities to fundamentally change business processes for the better. In recent months, ChatGPT and related AI capabilities have entered conversations about shifts that can come from cloud computing, robotic process automation deployments, quantum computing, and low-code/no-code solutions.
Exciting stuff to be sure, but these advanced capabilities come with a cautionary note. New technology deployed on top of old (or bad) business processes can lead to a situation we in Aite-Novarica’s Insurance practice refer to as “paving the cow path.” What you get is a bad process that goes faster and is more expensive to operate. Hardly the kind of transformation most business executives would endorse or support. This can lead to some truly unfortunate conversations with regulators, which can include both adverse publicity and, in extreme cases, cease and desist orders.
At our last pre-pandemic Research Council Meeting in 2019, we talked about the fundamental demographic shifts the next decade would bring. We are almost a third of the way to 2030, and we may have actually understated the impact. Surging early retirements, tight labor markets, and the blistering pace of technical advances are all making the management of both talent and knowledge critical. The winds here are hurricane force. By the time we get to 2030, Zoomers will represent 30% of the U.S. labor force, and the youngest baby boomer will be tipping in at 66. A large swath of Gen X will be eligible for retirement.
These shifts in personnel are going to necessitate changes in how insurers handle knowledge management, not least of all how they handle their data. The Insurance practice recently deployed a new analytical framework around the maturity of data management in the carrier realm. In a business climate being blown in multiple directions, data turned into actionable insights is digital gold. Flying blind, however, increases the risks of both missed opportunities and bad landings.
Time to strap in and get ready for what promises to be an exhilarating journey. We’re about a month away from our next Research Council meeting, where we’ll be diving into key topics like this impacting insurance IT leaders. Click here to request an invitation.