Todd Greenbaum is its President and CEO. input 1, a tech-enabled insurance billing and digital payments company.
The rise of Insurtech, with cost-effective, adjustable digital technology platforms and tools, is ushering in a new era of growth and modernization in the insurance sector. With this opportunity comes an entirely new set of software and data management technologies that lead to greater exploration in greenfield projects.
It is also encouraging that almost half of the greenfield startups Survey The 2019 report shows Celent plans to increase its investments regardless of their size or type.
What is Greenfield Initiative?
Greenfield initiatives can be boiled down to their origins as divisive and self-governing institutions. Identifying and exploiting customer needs that are yet to be met by the parent – or the entire insurance industry for that matter – is the entire reason for their existence.
Free from traditional mindsets, processes and systems, greenfields can innovate quickly and seamlessly with data and analytics at their center. It is enabled by cloud-centric and API-enabled systems backed by a strong network of Insurtech partners. Operations begin small, then test and adjust, until a proposal is drawn up on a large scale. This strategy allows greenfields to combine the potential that comes with the institutional knowledge that comes with an established firm as a result of building a new one.
How important is the investment requirement?
The resources required to undertake greenfield projects have decreased in recent years as compared to greenfield projects in the past. The proposition to go to market with a new insurance offering that costs a fraction of the time and financial investment than before is exemplified by the offerings from new insurance companies that have emerged in recent years.
For traditional carriers, this could be a threat, but more forward-thinking carriers will see this as an opportunity. Over the past five to 10 years, a large section of insurance companies have invested a significant portion of their budgets in their core technology and digital capabilities. While progress has been made, there is still a lot to improve in customer engagement and experience. It is not easy to reconcile the notion that the right course of action is to reengineer established product and customer segments. The Greenfield Initiative shows that this is something to consider.
What factors need to be considered?
A confluence of factors – a mature sector with built-in environments on customer propositions, API-enabled services from insurance companies and partnership opportunities – has led to this point. Insurers must nurture ideas in highly cost-effective ways, respond rapidly to partnership requests, and manage many different types of customer interactions. While it is possible to make use of most of these existing assets, an insurer must assess what it will take to do so and what benefits (time and money) will accrue to a solution that relies on Insurtech services. The following points should be considered by carriers considering this approach:
competition: What kind of competition will I face if my current assets cannot match other business models due to cost or transitional easing? Are my competitors making ground? If adoption continues to accelerate, how will my business be at risk?
Technology: Is my current technology preventing me from innovating fast? Will my digital transformation strategy fall short of achieving the scalable technology at the clip needed for modern times?
cost structure: Can the services still be delivered at a significantly lower cost? Are other areas of my business heavily subsidized by customer segment or product range?
Culture and Talent: Is my organization enticing human capital to be able to bring about new ways of thinking? If I continue to build on my legacy talent base, is it at risk of a continuing decline?
Strategic Ambition: Is my innovation portfolio filled with investments that are primarily incremental? What are the options being worked out to add 10%-15% of new revenue?
For most organizations, the answers to these questions would strongly suggest that a greenfield approach to innovation, proposal incubation or partnership-based model development should be a part of that idea.
For those who have yet to re-stage their holdings and continue to draw minor improvements from their existing legacy systems, employing a greenfield approach leaves room for new competitive threats and solutions to customer challenges. becomes empty. This will also have secondary implications as greenfield processes and lessons can be transferred to existing legacy/core systems and subsequently scaled up.
Greenfield initiatives should be given serious evaluation as an option when there is a great need for:
• Use innovative approaches to meet customer demands – especially when timely solutions are struggling with legacy technology or business models.
• Eliminate cost pressures in legacy businesses — services can be delivered at significantly lower costs by designing processes from the start.
• Leverage next-generation core technology platforms and microservices offered by Insurtech – providing a digital-first architecture.
For many organizations, the adoption of this approach is increasingly relevant, while for some, it is a compelling urgency. This requires a willingness to learn from mistakes with urgency, on top of investing in new systems and technologies. The opportunity is enormous, and insurers looking for an edge in the form of new products, time to market and digital efficiency will benefit from these opportunities to build greenfield businesses that will revolutionize the industry.