Moats and Moat Mortality – Excerpt from “Stone Tablets to Satellites”

This is the third of eight every-other-week blog posts excerpts from my book: “Stone Tablets to Satellites: The Continual Intimate but Awkward Relationship Between the Insurance Industry and Technology”. The publication date for this third post is April 6, 2022. The second blog post excerpted from my book was posted March 23, 2022. The last blog post of excerpted content will be June 15, 2022. Wells Media will publish the book on June 28, 2022 as a hard cover, paperback, ebook (Kindle), and audio book.

The excerpt of this 3rd post is from the Strategic and Business Models Section of the book. This section includes six chapters that encompass discussions of strategic perspectives; a discussion of expanding business models; of moats defending business models; of both the Amazon and Netflix business models; of an insurance business model; and of lessons which insurers can learn from the Amazon and Netflix business models.

Let’s get to the excerpt ….

It is very chic, very ‘terribly au courant’ to discuss moats as if the essence of a moat is entirely comprised of technologies or technology applications. But there are more, and more significant, attributes beyond technology or technology applications that comprise a moat.

I believe there are 10 attributes that can comprise a moat:

  1. Culture: The ability to create and maintain a shared sense that cascades throughout the firm from the boardroom to every functional department and support department (i.e. infrastructure staff, cleaning staff, cafeteria staff) of the firm’s value-add to its target markets.
  2. Scale: The ability to reach and retain the numbers of customers the firm requires to generate profitability.
  3. Brand/Reputation: The ability to create and maintain a strong, positive mindshare in the marketplace.
  4. Technology Applications: The ability to create, maintain, and update the portfolio of applications form current and emerging technology the firm needs to profitably get-and-keep current and future targeted customers.
  5. Customer Focus: The ability to create and maintain the firm’s abilities to develop a laser focus on current and future targeted customers.
  6. Logistical Efficiency: The ability to create and maintain an efficient delivery system of the firm’s products and services to the firm’s current and future targeted customers regardless of the product or service being purchased and regardless of the customer’s location.
  7. Cost (Low or High): The ability to establish the prices of products and services that simultaneously adhere to regulatory requirements, meet (if not exceed) current and future targeted customer expectations, and generate profit for the firm.
  8. Product Design: The ability to continually craft, inclusive of design considerations where applicable, products and services to meet, if not exceed, the needs the firm’s current and future targeted customers.
  9. In-depth Industry Knowledge: The ability to continually build, maintain, and update the firm’s knowledge of the current and planned regulations, pathways to profitability, and market requirements and expectations of both the specific industry lines of business it conducts commerce and also of the larger industry the firm in which the firm participates.
  10. In-house talent: The ability to attract and keep the wide array of talented professionals the firm needs to get-and-keep current and future targeted customers.

Note that ‘Cost (low or high’) means only one or the other for a specific product, service, or business unit. I realize that the same firm can employ both low cost and high cost depending on the product, solution, or market segment. Moreover, it is entirely possible, and I believe, desirable, for a firm to create a moat that is built on two or more of the moat attributes:

Moat Mortality

Regardless of which attribute or combination of attributes a firm uses to create their moat, a key question arises: What is the quality of the moat? That is, how fleeting is the defensibility of the moat? What might cause the moat to dry up? What will cause the firm’s moat to last more than three days?

Moats will dry up. The attributes of a moat will age, wither, and die over time. The ‘mortality’ of a moat depends on a host of factors including, but certainly not limited to:

  • emerging technologies and their applications
  • changing customer needs, expectations, or demands
  • staff reductions
  • damage to the firm’s brand / reputation
  • labor shortages
  • changing economic policies (at local, state, or federal levels)
  • external shocks (natural, man-made) to supply chains.

Simply put: any insurance firm whether re(insurer), agency or broker that is relying on technology (or a technology application) for a sustainable competitive advantage is taking on a fool’s errand.


The next blog post will be published on April 20, 2022. I will focus on an excerpt of content from one of the chapters within the Insurance Commerce Section. Specifically, I will excerpt some content from the chapter titled Risk Landscapes Perspective. The last blog post of excerpted content will be published on June 15, 2022. The book will be published on June 28, 2022.

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