Leadership or Disruption: Which Comes First?

When disruptive technology is the new normal, is insurance industry ready to go there on its own terms?

The fall is conference season in the insurance industry, and I've been to a few over the past couple of months. The conferences give attendees an opportunity to reconnect with colleagues, meet their peers, and ruminate about the state of technology in the insurance industry.

At the conferences I attended, there were the usual informational updates on the latest technology, budget, and software trends, along with a session focused on customer service, and of course a session on the emergence of Big Data in the industry and all that entails. While there were interesting discussions around emerging technological trends – think telematics, advanced analytics, and real time risk modeling – thematically the conferences seemed to center on what might be called, for lack of a cleverer descriptor, "business as usual."

That's not necessarily a bad thing. For the insurance industry that means things like continued legacy modernization, business intelligence and analytics initiatives, agency self-service platforms, and even some customer service improvements.

For many other industries, however, business as usual means something quite different, and therein lies the problem. For those industries, it means a continual focus on innovation and advancement, the disruption of business models that have outlived their usefulness, and the ability to adapt rapidly to changes in their marketplaces and to changes in the broader societal and cultural spheres they operate in.

Frank Petersmark, X by 2

Those industries have learned to embrace the reality that technological advancements that disrupt the status quo are here to stay. Now, if that doesn't sound like the insurance industry that should not come as any sort of surprise.

What is surprising, however, is that while the industry seems to understand this, there does not appear to be an industry-wide effort to correct it. The insurance industry has survived in its current form nearly 350 years, all the way back to the Great Fire of London in 1666, so it is certainly understandable that the processes that have worked since then should be highly valued and relied upon. However, changes are most assuredly afoot, and whether the industry cares to collectively acknowledge it or not, it's not exactly positioned to ride the next technological tsunami, whatever that might be.

Which brings us to the central question – in a world where technology as a disruptive force is becoming the new normal, would the insurance industry like to be proactively led there on its own terms? Or is it content to have some outside force massively disrupt its business model leaving the industry only to react to what is being thrust upon it?

I know how I'd answer that question. If you can find them, just ask the executives and boards from Kodak, Borders, and even JC Penney about how they reacted to threats and changes to their business models.

There's something to be said for proactively facing adversity and finding constructive ways to deal with it, or heaven forbid, taking advantage of it. That requires some foresight and leadership, and in most insurance companies the executive best positioned to do that is the CIO.

It's not often that CIOs in the industry have had an opportunity to drive the future agenda of their companies, but now is such a time. So will it be some proactive leadership or some knee- jerk reaction to the disruption that is inevitably coming? The future direction of the industry may well depend upon how that question gets answered.

About the author: Frank Petersmark is the CIO Advocate at X by 2, a technology consulting company in Farmington Hills, Mich., specializing in software and data architecture and transformation projects for the insurance industry. As CIO Advocate, he travels the country meeting CIOs and other senior IT and business executives at insurers, learning about their goals and frustrations, sharing lessons learned, and offering strategic counsel. Formerly Chief Information Officer and Vice President of information technology at Amerisure Mutual Insurance Company, Frank has more 30 years' experience as an information technology professional and executive.