Back to School: 3 Must-Read Books for Insurance Professionals

Artificial Intelligence, Digital Transformation - September 11 2019

It’s that time of year when students head back to the classroom, but you don’t have to be a student to crack the books and brush up on your knowledge and skills. Whether you're new to insurance or have a few years – or decades – of experience under your belt, it never hurts to stay current on the latest thinking and developments.

This is especially true in an industry as complex as insurance. Digital transformation, the insurtech movement, the Amazon effect on customer expectations, and the rise of new technologies such as artificial intelligence (AI), blockchain, and the Internet of Things (IoT) are all changing the industry in fundamental ways. Now more than ever, insurance brokers and carriers are wrestling with a core question: How do we innovate to stay competitive and grow?

Here are three must-read books – only one of which is specific to insurance – to help you hone your skills, expand your mind, and condition yourself to embrace change. You’ll also have some fresh ideas to talk to your colleagues about in the lunchroom.

1. Rob Galbraith, The End of Insurance As We Know It: How Millennials, Insurtech, and Venture Capital Will Disrupt the Ecosystem

The End of Insurance As We Know ItA strong contender for water cooler conversation starter of the year, Rob Galbraith’s bestseller The End of Insurance As We Know It is an accessible roadmap for change. If you ever go to insurance conferences, you’ve probably met Rob or heard him presenting on innovation, insurtech and the future of insurance. Called “the most interesting man in insurance,” Galbraith has over 20 years of experience in financial services and has been “a mentor to many in the insurance industry.”

Galbraith’s book reminds us that history is full of companies and industries that believed they wouldn’t be disrupted by technological change – Kodak, anyone? For an industry like insurance that is over 300 years old and has a reputation for conservatism when it comes to embracing technological change, The End of Insurance As We Know It is a wakeup call.  

Galbraith takes a deep dive into how emerging technologies like blockchain, AI, and IoT can make insurance better and move the industry – perhaps kicking and screaming – into the 21st century. Dense but digestible and filled with real-world anecdotes that will be relatable to insurance industry insiders, Galbraith is a knowledgeable and articulate guide to the monumental changes that insurtech is bringing to our industry. 

The End of Insurance As We Know It makes a compelling case for how new technologies can help insurers overcome the challenges of selling a complicated, expensive and often confusing product to a new generation of consumers. While the book’s focus is on personal lines, it is highly relevant to commercial insurance brokers and carriers who are looking to digitally transform as well. If you’re an established player or incumbent in the insurance industry looking to understand what insurtech is all about or an investor or entrepreneur looking to get into the market and sell to insurance companies, Rob Galbraith’s The End of Insurance As We Know It is required reading.

2. Ajay Agrawal, Joshua Gans and Avi Goldfarb, Prediction Machines: The Simple Economics of Artificial Intelligence

Prediction MachinesHave you ever struggled to define what artificial intelligence actually is, or to articulate the business case for AI in insurance in a way that’s easy for insurance executives to understand? The bestselling Prediction Machines is the book for you. Co-authored by a trio of distinguished academics including serial AI entrepreneur Ajay Agrawal, founder of the Creative Destruction Lab, an accelerator for AI start-ups, Prediction Machines has become a kind of bible for understanding what AI means for humans.

As AI permeates our everyday lives much as the Internet did in the mid-1990s, what are the implications of AI technologies for our jobs and the economy? When does a new technology transcend “tech’ and become a new economy? And compared to other technological advances, what makes AI so special that it falls into a category that is entirely its own? The authors of Prediction Machines answer these questions and many more in this accessible guide to the economics of AI – and you don’t need to have a computer science degree to grasp the key arguments in the book.

If, like many people, you secretly or not so secretly fear that AI is coming to take your job, Prediction Machines may help put your mind at ease. While there’s no question that AI will change the insurance workplace, the authors argue that it won’t replace humans. AI lowers the cost of making predictions, something that humans are quite poor at – we’re slow and biased in our predictions. But prediction is only one piece of a complicated puzzle: As AI takes hold, the value of human prediction will fall, but human judgment will become much more valuable. 

While Prediction Machines isn’t an “insurance book” per se, the authors deliberately set out to look at the general lessons to be learned about AI that are applicable across a broad range of use cases and industries, so the insights here are absolutely inclusive and relevant to insurance. For anyone who is developing an AI strategy or wondering where to start, Prediction Machines will bring clarity to a topic that is all-too-often clouded by fear, uncertainty and doubt.

3. Kris Østergaard, Transforming Legacy Organizations: Turn your Established Business into an Innovation Champion to Win the Future

41u8xAVumtL._SX324_BO1,204,203,200_Within the insurance industry, the current pace of technological change is unprecedented, but obstacles remain. In his book Transforming Legacy  Organizations (Wiley, 2019), Kris Østergaard, co-founder and Chief Learning & Innovation Officer of SingularityU Nordic, writes, “Many established organizations have a status quo culture that causes you to prefer avoiding loss over winning. This attitude is a barrier to change and holds innovation back.”

Arguably, nowhere is this truer than within large insurance companies that are notorious for their risk-averse cultures. When it comes to innovation, large insurance brokers and carriers must overcome significant hurdles including legacy IT infrastructure and unwieldy, deeply engrained processes that haven’t changed in decades. Put another way: the insurance industry has more than its fair share of baggage weighing it down.

So, how does an established insurance carrier or broker successfully navigate an innovation journey or develop a successful, cutting-edge AI strategy to digitally transform their business processes?

According to Østergaard, it comes down to culture. Humans have an inherent resistance to change, and large insurance companies must overcome formidable psychological and cultural barriers in order to innovate. Østergaard describes this innate resistance as an “organizational immune system” that has been built up over time specifically to repel change. Transforming Legacy Organizations offers practical “culture hacks” and real-world examples of large organizations that are transforming their cultures and embracing meaningful innovation.

Østergaard diagnoses an organizational ailment that is all too common in large insurance organizations – he calls it “innovation theatre.” This is where large incumbent organizations go through the motions of establishing innovation labs and courting insurtechs, but at the end of the day, the business and its leadership aren’t genuinely committed to change.

The good news is that while innovation is much harder for large organizations, Østergaard argues that large established organizations are much more likely to succeed in their innovation initiatives because they have a wealth of resources, infrastructure and data that an insurtech start-up can only dream of.

Østergaard provides examples of large companies that are exploiting the power of “uncommon partnerships” to gain the best of both worlds. This strategy will be familiar to anyone in the insurance industry where insurer-insurtech start-up partnerships are increasingly becoming the norm. When confronted with disruptors entering the marketplace, if you can’t beat them, join them.

In an era where identifying your competitors is no longer a straightforward question, and insurance professionals are increasingly being asked to interact with – and trust – AI and machines, Østergaard’s Transforming Legacy Organizations is a must read.

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