Commercial Insurance, Emerging Risks, & Customer Centric Innovation: A Digital Manifesto for Commercial Insurance & Risk Management

Emerging Risks & Legacy Solutions, A Losing Race

Enterprises are facing a new generation of risks. Risks driven in large part by a world undergoing digital transformation. This is a race legacy insurance and enterprise risk solutions won’t win. They were never designed to integrate with a digital world. Winning the race requires a new generation of insurance and risk solutions. A generation of digital solutions built on an interoperable innovation framework. A framework designed not to deliver individual insurance and enterprise risk products, but instead to deliver them as components of solutions that help enterprises thrive amidst a new generation of risk.

Transformed: Business in a Digital World

A new digital economy is forming. One global in design and operation. An economy working at internet speeds driven by a new generation of cloud based platforms and services. In a new environment of sensors, drones, artificial intelligence, and other emerging technologies. All of these being seamlessly connected together and instantly communicating with each other.

There are now new platforms that enable business processes to be data and analytic driven with artificial intelligence at their core. They are part of complex digital ecosystems in which multiple organizations communicate, collaborate and compete. While these represent tremendous opportunities for growth and change, they also create a new generation of complex risks.

High Velocity Risk: Risks & Requirements At Internet Speed & Scale

The risks we face today form at internet speeds and scale. Staying ahead of them requires  the ability to detect, analyze, and make decisions about those risks even faster.

Those risks are entwined in value chains that create and deliver increasingly digitally enabled goods and services to end customers. Risks and decisions made in one part of that value chain can dramatically impact the rest of the chain in microseconds, even when they are a half a world away.

For enterprises to compete in this high speed digital world and its related risks, requires far more than a risk analysis and a reporting function, and far more than insurance that does simple risk transfer. They will need a suite of integrated solutions. Solutions that deliver real time risk transparency, assessment, prediction, prevention, mitigation, and recovery. Solutions that digitally connect people, process, assets and systems throughout the enterprise and its extended value chain at the inception points of risk and decision making. Solutions that are continually innovated and updated at the speed the risk and business environment changes.

Bound to Fail: Legacy Insurance and ERM Solutions

The insurance and Enterprise Risk Management Solutions most companies are operating with were born in a different era. They were designed to meet very different requirements.

While they did an amazing job for their time, they weren’t designed for today’s world. Their designers had little if any understanding of how digital ecosystems, artificial intelligence, big data, the Internet of Things, smart contracts,  smart products, and internet scale and speed would change businesses, the risks they face and what is required to manage those risks.

They were designed for a simpler, slower paper based business world. They were also designed as fragmented solutions to assess, report and react to specific legacy risks and to support compliance reporting. Today’s risk velocity and complexity and the cascading effect those have throughout the value chain weren’t part of their design.

The ability to access, integrate, and act on real time data flows are core to creating business value in today’s economy. The same is true of the risk related data flowing throughout the world. For the most part legacy solutions have no capacity to interoperate with the sensors, data and analytics, artificial intelligences, and processes that enable today’s digital enterprises and the ecosystems of which they are a part. Further, the data those systems do have access to remains trapped in solution silos behind antiquated business models and architectures.

Legacy insurance and risk solutions were never designed to leverage mobile technology or use interoperable services layers to connect directly into business processes or to business decision makers. It’s impossible for them to play a proactive role in building an integrated risk culture and to enable the flow of risk insight, communication and data across the enterprise and it’s global value chain. That capability is mission critical for organizations that expect to grow and profit in a digital economy.

Insurance & Risk Solutions for a Digital World

There are no excuses for insurance and risk management providers who aren’t deeply investing in bringing a new interoperable generation of solutions to market. And there are no excuses for enterprise customers who don’t demand that they do so.

Emerging technologies enable us to address risk in a digitally transformed world. Cloud/SaaS and API-enabled services give us the ability to connect not only the enterprise, but its entire value chain in real time.

New next generation sources of big data and analytics are coming to the market all the time within business models and architectures that make accessing, supporting and working with that data easier than most of us ever imagined. Artificial intelligence is giving us the ability to interpret that data and act on it at speeds and levels of granularity and precision we never had. The Internet of Things, mobile devices, sensors, smart machinery, smart vehicles, and even smart cities give us the ability to detect and to act on risks even before they occur.

Blockchain is bringing a whole new capability to the world. The ability to establish trusted, validated processes and transactions that can operate independently based on rules built into smart contracts. These process can be tied to data created by verifiable entities and sensors from people and equipment across the world. The result is dramatic increase in speed and efficiency in data driven processes and that includes the ability to detect, qualify, and act on risks.

Next generation solutions built using these technologies can move insurance and Enterprise Risk Management Solutions from reacting to risk to proactively preventing it. They can integrate insurance, risk management and risk prevention and or mitigation in real time across the processes and decision making of the extended value chain.

These solutions will use sensors, big data, AI, and integrated mobile solutions to make risk and risk mitigation options and costs transparent. They will use the same technologies to predict and prevent risks from occurring while relying on the exchange of notifications and alerts throughout the value chain. They will bind to other services through cloud based systems that help enterprises, their employees, customers, and partners mitigate and recover from risks. And they will do that at internet speed and scale.

Winning the Race: Digital Innovation Framework & Collaboration Required

Risks are growing in number and complexity faster than at any other time in history.

While insurance and enterprise risk providers focus on individual risk clusters, it still leaves their enterprise customers with the challenge of piecing together a risk mitigation framework on their own. That should be unacceptable.

graphic: digital innovation in insurance

With today’s technology, we as an industry can provide a far better solution than throwing our individual solutions at the enterprise and letting them sort out how to make a whole cloth solution out of our patchwork. We can provide a collaboratively defined cloud-based framework that interoperable solutions can be built upon.

That framework needs to start with a model for a digital world. It also needs to understand the business strategies and processes that will make businesses successful within it and the risks that will stand in their way. Next it needs to identify the devices, data, and analytics that enable us to better identify, understand, predict, prevent, mitigate, and recover from risk. It must enable risk communities and ecosystems to share risk data, insight, best practices, and ratings of solution providers. It must be architected so that insurance and risk solutions and services can plug and play with minimal cost and time. It should make it easy for enterprise customers to continually refine and update their risk management environment, as easily as they trade out applications on their smartphones. Finally it must identify the infrastructure and innovation challenge points where industry collaboration and interoperability can accelerate the value created by these next generation solutions and this next generation digital ecosystem.

Building an interoperable innovation framework or ecosystem isn’t something any one company will do. It will take a digital village. And even with the most committed villagers it will take time.

There is no question that it will never be perfect, nor will it answer all the needs of the enterprise. It will, however, focus and accelerate the work of the industry and it will reward the customers and solution providers that support it. More importantly, it will give enterprises the whole cloth solution they need to stay out in front of the fast moving risk environment they now face.

To accomplish that, enterprise customers need to vote with their voices and dollars by becoming proactive participants in defining the framework, and by rewarding the insurance and risk solution providers proactively supporting it.

It isn’t a question of if the insurance and risk management industries will become a digital ecosystem working within an innovation and interoperability framework, it’s a question of when. Legacy market leaders who wait on the sidelines will find themselves struggling to remain a viable part of the industry.

Consortium Kick-off at InsurTech FUSION Summit

SVIA will be kicking off a consortium to focus on this at its upcoming InsurTech FUSION Summit. The summit is bringing together leading commercial insurance and enterprise risk innovators and their customers. We will be working within our innovation Lab with our members, which include Advisen, leading insurance companies, startups, solution providers, and industry associations to identify and kick off some of the core initiatives to support this effort. We will also be formally announcing a venture partnership that will help fund startups that can contribute to the framework.

We’d love to have you be a part of it.  For additional information visit us at