The X and Y factors that shape an insurer’s competitive edge

We have been working with customers recently to identify what gives them their competitive advantage, and how these affect their global operations

As an industry, in particular in the London Market of years gone by, we have tended to blend our X and Why? Factors and make little distinction between the two. I understand that am polarising for dramatic effect, but essentially I think this is true. So what are X and Why? Factors, and why do I believe this?

An X Factor is something that gives an insurer true and tangible competitive advantage; for instance rating, product development, speed to market and channel innovation to name a few.

Why? Factors are things that insurers seem to want do in a hundred different ways to achieve the same result as their competitors. These would include regulatory change, administration, upgrades, and underlying technology. Why? Factors do not add real value or differentiate the business in a way that customers care about. They just create cost.

It makes little sense to compete over Why? Factors. Actually it’s a bit silly.

Why? Factors should be collaborated over; imagine an environment where you could actually spread the risk of regulatory or market change across a number of insurers and lower operational costs? You could always have a fight X factors, but doing anything other than collaboration over Why? Factors strikes me as being not in the best interests of the industry or the individual companies themselves.

So what is preventing this? Well, years and years of piling tech upon tech, acquisition on acquisition, has given the insurance a high cost, high complexity and ultimately high-risk way of doing business. Add into this upgrade paralysis where each new system introduces another hell of integration and upgrade and you can see the reasons. Even where the same supplier is selected, the different functions are on different versions. I would go so far as to say a technical Stockholm syndrome has set in at some companies. 

But now things are different and it’s time to think differently.

If your technology cannot:

  1. Be upgraded by your supplier at no extra cost
  2. Expand and contract as your demand changes
  3. Flex quickly when you need it to
  4. Help you deliver new product and rates when you need it, not when the technology allows
  5. Be open and seamlessly integrate simply with innovations and systems as they pop up

Then it’s time you looked at technology that can. Dump the Why? Factor and focus on your X Factor. Let Duck Creek help you uncover the X Factor in your business.