Strategic Planning for Insurance in the COVID-19 Era
New SMA Blog by Mark Breading, Partner, Strategy Meets Action —
No one will mistake 2020 for just another year. The turmoil caused by the pandemic, lockdowns, and social unrest is unlike any other year. Businesses, individuals, and governments have all been forced to make dramatic changes and adapt to new realities.
The P&C insurance industry has responded admirably amid the chaos and continues to adapt to the evolving environment. As insurers develop strategies and plans for 2021, the logical question is where to start. The traditional planning processes may need to be supplemented with new approaches, given the great uncertainty brought about by the events of 2020. One approach to consider is utilizing scenario planning to inform the future strategy.
Scenario planning is most valuable when there are considerable uncertainties regarding the future. By definition, strategic planning always has to deal with an uncertain future. However, a new set of variables is now layered on to the traditional factors that influence strategic decisions. In a new research report, SMA has evaluated a wide range of variables and has developed four scenarios for the future for P&C insurers. P&C Insurance Post-COVID-19: Four Scenarios for the Future, looks at the implications of different possibilities for economic recovery and the nature of digital transformation in the world at large. The four resulting scenarios that SMA has described are:
- Survival of the Fittest: In this grim scenario, insurers would be forced to adapt to decreased demand and growth by cutting back the workforce, expenses, and investments in digital transformation and innovation.
- Digital Prevails: In this possible future, the pandemic would be embraced as a change event, and the lessons learned would be catalysts for finding creative ways to invest.
- Back to the Future: The world of P&C insurance would be similar to what it was like pre-COVID-19 in this aptly named scenario.
- Innovation Abounds: A robust economy and an acceleration of digital transformation in the world will require insurers to take innovation to the next level and accelerate their own transformation.
What would each of these potential scenarios mean for the industry as a whole? For individual insurers? For different lines of business and business areas within an insurance company? That is the essence of scenario planning. I wish I could travel to the future so that I could tell my clients what future they should plan for. But since time travel is not available yet, the next best thing is to engage in scenario planning to help think through the implications and strategic responses for various possible futures. And then use that thinking as input into the traditional strategic process.
About The Author
Mark Breading, a Partner at Strategy Meets Action, is known for his insights on the future of the insurance industry and innovative uses of technology. Mark consults with insurers and technology companies on forward thinking strategies for success in the digital age. His inventive methods and his ability to incorporate InsurTech and emerging tech into business strategies are unparalleled. Mark also leads SMA’s research program, has overseen the publication of over one hundred research reports, and directed custom research projects for insurer and tech clients. His thought leadership in the areas of InsurTech, emerging technologies, customer experience, and digital strategies has earned him rankings as a “Top Global Influencers in InsurTech” by InsurTech News and Onalytica and a place in the 10 finalists for the “Top Global IoT in Insurance Influencer Award.”
Before joining SMA in 2009, Mark spent 25 years with IBM, where he co-developed IBM’s Account Based Marketing program and led the global project office to implement ABM across all industry verticals worldwide. Mark has held both technical and business roles in sales, consulting, marketing, and business strategy and has advised insurers around the world for almost 30 years.
He is a frequent speaker at industry events; an InsurTech mentor with the Global Insurance Accelerator; and a frequent contributor of articles to Insurance Thought Leadership, Insurance Networking News, LOMA Resource, and many other industry publications.
About SMA
Exclusively serving the insurance industry, Strategy Meets Action (SMA) is an advisory services firm offering retainers, research, consulting, events, and innovation offerings to both insurance companies and solution providers. Learn more about SMA at www.strategymeetsaction.com.
SOURCE: Strategy Meets Action (SMA)