A Technology-Focused Insurance Industry Analyst Research Framework

This post is about creating a technology-focused insurance industry analyst research framework …

But first, the analyst research agenda

As an technology-focused insurance industry analyst, whether working for another analyst firm or for my own analyst firm, clients always asked for our annual research agenda. Clients, insurance firm and technology firm clients, rightfully wanted to know the insurance industry areas and concomitant technologies / technology applications we going to research during the year. They knew that our research agenda drives the areas of analysis, reports, presentations, and client briefings (we would both take and provide).

Collaboration and creation of an analyst research agenda

Each year we (‘we’ being colleagues of the insurance analyst or insurance and financial services team) would collaborate on an insurance research agenda that would cover a range of topics including areas:

  • existing clients cared about
  • prospective clients cared about
  • management directed us to research
  • we believed were important to cover regardless of whether clients agreed.

Two lessons that were continually reinforced to me through the decades of creating and fulfilling the annual research agenda:

  1. clients had a poverty of desire (they didn’t know where they should ask analysts to invest their time delving into)
  2. if we only covered areas that our clients wanted us to cover, we would be effectively digging extremely deep ruts in the same ground year-after-year-after-year that would put our analyst team into a non-competitive position fairly quickly. (This concept of basing a research agenda by only, or primarily, listening to clients gets into the value-add of a industry vertical analyst. I’ll write about why analysts must not fall into that trap in a future post.)

Our collaborative approach, factoring in not just giving clients what they wanted, always generated an annual research agenda.

However ….

An analyst research framework serves as a foundation for the research agenda

As an analyst, there are many times I prefer to base our research agenda on the context of “how we see the insurance industry both as a whole and as a collection of component parts”.

The context is an analyst research framework.

An analyst research framework is a visual taxonomy that represents our vision of the insurance industry. Through the decades our analyst team used different research frameworks. One consistent truth: there is nothing sacred in any research framework whether our team developed it or someone else developed it. I compare the ‘exactness’ of creating a research framework to creating a taxonomy: there is no correct answer.

Beyond capturing our vision of the insurance industry, the development of a research framework is an exercise in search of determining:

  • an attack plan to conduct research
  • a ‘mental home’ to organize planned and completed research
  • a method to more easily identify themes whether as a guide to base the research before it is completed or to categorize the research after it is completed.

I have found research frameworks to be useful tools beyond fulfilling the three attributes listed above. Our visualizations came in handy when I delivered presentations to insurance and/or technology audiences at conferences or during briefings with clients. The research frameworks illustrated to our clients and prospects how our team of insurance analysts viewed the insurance industry.

A proposed technology-focused insurance analyst research framework

I offer the framework below for new technology-focused insurance analysts who are thinking about diving into insurance industry research activities or for current analysts who are wondering if they should change their existing research frameworks.

Obviously the framework can be used by analysts working in an insurance firm, a technology firm supporting (or wanting to support) insurance firms, or within (re)insurance firms. The framework can be used by vertical analysts in industries other than the insurance industry.

A framework is a ‘visual template’ that should trigger ideas for a research agenda.

There is quite a lot ‘going on’ in this visual of my current vision of the insurance industry. All of the elements in the framework are interdependent.

The visual captures the insurance firm’s primary objectives; the evolving risk landscape; key elements of the marketplace; factors specific to any one insurance firm; factors specific to the insurance industry; bedrock forces of the United States (analysts in other countries should obviously replace these with their country’s counterparts); the emergence, enhancement, and evolution of technology (beyond IT and Telco to encompass other technologies that impact one or more major lines of insurance); a gradient capturing the acceptance of (new) technology; and the flow of time.

Regarding the ‘flow of time’ – without getting too much into my eventual post about the true value-add of a vertical analyst, I want to state that analysts should be ‘working in the future.’ By that, I mean that insurance industry analysts, particularly technology-focused insurance industry analysts, should be thinking about and writing reports about the potential 3-5 year future impact / implications of a technology or group of technologies (such as IoT) on the insurance business issue/issues of their reports/presentations/briefings.

As I mentioned, there is a lot going on in the framework. There are also missing elements including the silos within any one insurance firm; the level of skills and expertise of an insurance firm’s staff; the actual insurance lines of business an insurance firm sells and services; and the various types of distribution channels the insurance firm uses to reach its target markets.

In a broad sense, the framework and its panoply of elements present an operations research problem: finding a solution of how to achieve an objective (introduce a new insurance product, explore the market for new opportunities, find new acquisitions) while simultaneously taking a vast variety of sometimes supporting and sometimes opposing factors into consideration.

Where is the technology focus?

At this point in the post you might be wondering where the technology focus is for insurance analysts in the framework? That is, besides the gradient of technology acceptance and the the ’emergence, enhancement, and evolution of technology’ shape under the framework.

The answer is: Everywhere.

The focus of technology is in every single element of the framework. The focus of technology is also in combinations of some of the elements (i.e. evolution of IT and Telco technologies mixed with the Internet and materials technology (or nanotechnology) results in the concept of the digital, mobile marketplace or possibly IoT). We can go further by combining the digital, mobile marketplace with customer expectations to generate the concept of “The Experience Economy.’

The focus of technology is, and needs to be, in the mind of the analyst as s/he creates the research initiatives, reports, and presentations directly from the framework-grounded research agenda.

Remember that technology plays three important roles in the insurance industry – technology:

  1. changes the risk landscape, sometime introducing new risks (i.e. an Tesla ‘driver’ killing himself because of allegedly misusing the Auto-pilot capability) and sometimes eliminating existing risks
  2. improves the efficiency and/or effectiveness of insurance systems used to get, service, and keep customers and producers (agents, brokers, MGAs)
  3. changes customer expectations regarding how to conduct commerce (whether with non-insurance firms or with insurance firms).

Insurance business issues are paramount

To wrap this post up, I want to state that whether a technology-focused insurance industry analyst creates a research framework to drive the research agenda or immediately builds the annual research agenda, it is critically important that the analyst focus primarily on insurance business issues.

Personally, I prefer the insurance business issues encompassing commerce, channels, customers, and claimants. Other analysts might prefer focusing on the operations that keep the insurance firm in business. Still other analysts might prefer to invest their time on insurance financial operations.

Regardless of the area, or areas, of the insurance industry the analyst wants to invest their efforts, or where their management directs them to invest their efforts, it is imperative the analyst put themselves in the ‘shoes of the insurance business person’ (and not in the shoes of the insurance CIO or CTO or any other technology manager). Technology managers exist to support the insurance business: not the other way around.

It is definitely enjoyable to research emerging technologies but insurance firms don’t exist for the sake of technology: they exist to manage / mitigate the risks of society (people, families, businesses) in a legal, regulatory compliant manner.

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