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A Dialogue on the Future of Insurance with Gail McGiffin
The insurance industry is going through unprecedented change thanks to digital transformation. To understand key considerations members of the ecosystem should be thinking about, we spoke with Gail McGiffin, Managing Director and Global Insurance Advisory Lead at EPAM. Gail brings a wealth of experience and deep perspective from her roles in consulting and the industry alike. Read on to get her expert view of where the future of insurance is headed – and to learn how you can adapt.
Insurance companies need trusted advisors to transform. What does being a truly trusted advisor mean to you?
For me, being a trusted advisor means continually bringing value to clients to help them ask the right questions to get to better answers and solutions needed to transform and innovate. Sometimes this means challenging their ideas or bringing thought leadership to imagine the possibilities; sometimes this means having the courage to shine a light on inhibitors to success, holding up a mirror to the organization’s inertia or balancing technology tool fascination with real-world experience. In all cases, it means bringing honest and objective opinions even if they are unpopular. And, while this sounds counter-intuitive to the public perception of consulting, I think it’s important for trusted advisors to bring the best capabilities of their firms and teams but also to be mindful of the client’s needs. mindful of self-serving propositions.
You’ve had a successful career and have seen the insurance industry from every angle. What are the macrotrends and implications for the insurance industry that you see today?
There are some macrotrends that have the potential to reshape the role of insurance. If the pandemic over the past two years has shown us anything, it’s how interconnected our global economy is and how important digital enablement has become across our working and personal lives. These events have revealed important implications for supply chain risks, heightened levels of cyber vulnerability, business-model reinvention and new ways of working. As such, we have new clarity on emerging insurance protection and risk-mitigation needs. New exposures must be underwritten, new coverages are needed to address gaps, changes in consumer expectations are reshaping digital interactions and dimensions of financial and reputational risk take on new meaning.
At the same time, the velocity of technology innovation and democratization of data are powerful trends that introduce both challenges and opportunities for insurers. A future of embedded insurance holds promise for providing seamless protection to the automotive industry, for example, while also disrupting the way insurance is bought and sold.
We’re also seeing the early days of ESG that will bring considerations for regional health trends, energy use, industrialization and location risk.
All this is against the backdrop of harder P&C market conditions, abundance and fluid deployment of capital, social inflation that is challenging to quantify and ever-increasing regulatory pressures. I believe both insureds and insurers alike will be rethinking the roles of risk transfer, risk management and financial protection as they face these macrotrends.
Has the pandemic changed the industry’s need to transform? Is there anything in particular that organizations need to do differently?
Insurers need to adopt more digitally-native thinking and behaviors. The remote nature of our lives for the past two years goes well beyond our use of Microsoft Teams or Zoom, well beyond virtual connectivity to applications and use of cloud infrastructure. It has forever changed how we work, how we sell, how we manage risk and how we fulfill the insurance promise. Many small businesses vanished while others quickly transformed to digital business models. This required insurers to revisit their portfolio mix and understand new exposures posed by reinvented business operations. Everyone working from home suddenly had home office and cybersecurity exposures. Pandemic-related business closures, worker classification, government health mandates, vaccination status and new forms of regulation have raised questions about insurance coverage and insurability of certain exposures across P&C and Life. This is unprecedented.
As we continue to reimagine our working and personal lives moving forward – one based less on the physicality of personal and business relationships – we’ll need to also reimagine the role of insurance and the potential for new products, new services, new digital enablement and even new measurements of success.
With a background in global advisory as well as industry startups, can you talk about your perspective on organizational transformation and innovation?
I’ve been fortunate to have a career that has been both industry and consulting, both business and technology. I’ve also had the opportunity to build new products, new services, new businesses and new companies – in many ways, a career of startups. This has allowed me to experience both the transformations of established (re)insurers as well as the innovation possibilities of startup (re)insurers.
When you are a large established company, you look at the encumbrances of your legacy platforms with innovating and quickly getting to digital capabilities. If you're a startup, you have the luxury of a blank slate for digital-native and cloud-first investments enabling nimbleness and versatility, but you cannot sidestep the need for core applications for your business and financial processing. I think both models have elements of NewCo and OldCo, as much as we may prefer to think differently.
Regardless of where you are, I think it’s more about how you approach transformation and innovation in a parallel manner – as a two-speed proposition, if you will.
Can you talk about the elements necessary for a holistic insurance ecosystem redesign in 2022?
Today’s insurance ecosystem is not just about the business of selling and servicing (re)insurance or technology enablement through package and custom applications, cloud migration and digital tools. It is about more than leveraging newer technologies, such as machine learning, blockchain and artificial intelligence (AI), and new sources of data from sensors, GIS or IoT. It is fundamentally about immersive behaviors with the broader economy and new forms of partnering that take advantage of a wide array of capabilities that you don’t have to own as the insurance company manufacturer.
This requires a different mindset about competitors, partners and other industries as well as a willingness to embrace experimentation, redefine branding and market penetration and potentially bend the business model. This will introduce the need for new competencies in opportunity due diligence, P&L ownership, vendor and partner management, and repeatable innovation. This will elevate the complexity of the (re)insurance business as we know it today by opening the boundaries of our system to leverage and integrate new technologies, new forms of data and new types of commercial relationships. Future leaders in our industry will be very adept at managing these complexities as well as speed of opportunity and change in this ecosystem — be that the universe or metaverse.
Given the demands of the job market, what must organizations focus on to help drive change?
If I think about my career and specifically what's happening with underwriting and claims in most reinsurers and insurers, I see an ever-growing exodus of talent through industry consolidation, retirement and even pursuit of personal change. The Great Resignation is accelerating a tremendous brain drain in the industry — one we cannot afford to ignore. The industry is experiencing unprecedented turnover as employees seek out new roles, a step change in their compensation, a leap-frog promotion or the chance to work again with a former team. This is happening across all levels and all generations in the workplace.
This mass movement and churn, coupled with new hybrid work environments and lack of strong channels to recruit Gen-Z talent, poses significant challenges for the future of insurance. As institutional wisdom departs, it's not as simple as replacing the workforce; it’s not as simple as codifying that intellectual capital into AI technologies. We need to think about what the future talent needs are and how they differ from those of the past. We need to think about how the roles are changing, more enabled by integrated technologies and better fueled by data-driven insights. We need to think about how teams will be built and cultures will be developed so we become intentional and purpose-driven with our talent journey.
If we reflect on the skills profile of what claims and underwriting looks like today and consider the needs of tomorrow, we should ask: “Are underwriters as immersed in the analytical part of the job, or are they doing more selling and focused on value-add account management? Is claims even involved with certain types of claims because technology has taken over and claim talent is focused more on the higher complexity, higher severity claims?”
If we think about the generational aspect of our industry and the implications for technology and data-driven enterprises, we need to consider that the ways we learn, assimilate and onboard, professionally develop and personally grow will change. Our systems of talent management must change as well.
In my last advisory role, I was inspired to create the vision for the underwriter of the future. In my last startup role, I was inspired by the possibilities of the convergence of insurance, reinsurance and insurance-linked securities (ILS) capital deployment. Now I am excited about the future possibilities more broadly across the value chain in the face of such compelling industry change dynamics, and the opportunity with my new Global Insurance Advisory role at EPAM to pursue those possibilities with our industry and our clients.
Would you like to continue the conversation with Gail? Get in touch with her here.