The two biggest forces driving insurance disruption today
02/08/2018

Diversity and technology are two of the forces often discussed as facilitators of disruption by executives at insurance companies. It appears both are likely to play a key role in light of the Amazon, Berkshire Hathaway, and JPMorgan Chase healthcare partnership.

By Pat Renzi, Principal, Life Technology Solutions, Milliman.

The recent news that Amazon, Berkshire Hathaway, and JPMorgan Chase are joining forces to try to deliver affordable and accessible healthcare to their U.S. employees reverberated broadly in the media and certainly caught the attention of the insurance industry. These three companies are giants in their respective fields, and if there is a hope of finding lasting disruption in the healthcare market, many surmised this partnership just might lead the way. My Milliman colleagues provided a thoughtful and provocative response to what we might expect to see from this partnership.

It is easy to imagine the collective sigh from insurance executives who had been waiting for the other shoe to drop. Discussions of disruption have been top of mind in boardrooms for several years—when, who, and how. In these discussions, two of the forces often discussed as facilitators of disruption are diversity and technology. It appears both are likely to play a key role as this unfolds.

Diversity of thought, experience, and expertise
The beauty of the Bezos/Buffett/Dimon collaboration is that each of these leaders brings unique experience to the table. The reason the market sat up and took notice is because it represents the collaboration of a disruptive technology company, a very conservative and steady investment company, and an expert financier of large-scale innovation. This is diversity in action. These visionaries understand that collectively they can find a solution that they would not find on their own. At the same time, they are humble enough to acknowledge that they need experts in all aspects of healthcare and pharma to be successful. These are organizations that understand and leverage the power of diversity of thought, experience, and expertise.

There is ample research on why diverse organizations perform better and are more innovative. They allow everyone to share their collective expertise and experience. This diversity is a critical requirement to successfully navigating disruption. In our modern economy it is no longer prudent for companies to work in silos. A team approach allows for faster and more intelligent innovation. Other players, whether technology titans or digital Insurtech upstarts, should be welcomed for their varying perspectives and experience, which will yield better solutions for the consumer.

Bridge-building technology
There is no debating that technology will play a major role in the resulting solution. The possibilities are numerous. As Milliman has speculated, this could include everything from online shopping for healthcare, to simplified claims processing, to utilization of data to help manage pharmaceutical costs. In an article in the New York Times, the pithy headline “Dr. Alexa, I’ve Been Sneezing and My Throat Is Sore” illustrates the expectations for technology to be the facilitator in providing customer value and cost reduction.

The idea that the insurance industry is ripe for technological disruption is hardly new. Significant investments are being made in the Insurtech space as companies look for ways to drive innovation. Strategies to improve customer engagement, reduce costs, and provide innovative new products and services are top priorities for insurers. Significant change is happening.

From the back-end perspective, technologies such as the cloud and artificial intelligence (AI) enable companies to replace legacy systems and automate processes. On the front-end, innovations in mobile, voice, digital commerce, and the internet of things (IoT) are providing opportunities to not only communicate on-demand with their customers, but also to better understand them and devise solutions that more effectively meet their needs.

This is a fascinating potential disruption of a huge, established industry and we are looking forward to how the energy and chutzpah of these three organizations may help us generate innovative solutions that revolutionize healthcare.

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