With insurers weighing up pros and cons of digital enablement within the industry as a whole, discussions around how they’ll achieve these outcomes are happening more frequently. ‘The Greenfield Approach’ is a term used often among insurers; and with good reason. Greenfield has a lot to offer; however there are many considerations to reflect on too.
First of all, what is Greenfield?
Greenfield, in insurance, is a way of digitally innovating LOBS, products and services within the business using entirely new technology platforms. Starting from scratch and not underpinning these products with existing infrastructures, Greenfield has a host of benefits – but also its own set of difficulties.
The pros of the Greenfield approach in insurance
Greenfield is still a relatively new concept among insurers; with several aspects to it which are intriguing the industry, such as:
Say goodbye to the legacy mindset.
One of the main culprits halting fast innovation in insurance is legacy systems. Systems that, when interrupted with new processes, cannot function, having a hugely detrimental affect on the business. The Greenfield approach, as its starting from scratch, doesn’t have this problem. Insurers wouldn’t need to bend the technology to work with existing systems; instead, they bend the technology to do what they want it to do in the first instance.
Providing excellent customer experience is at the forefront of priorities for insurers. Beating the competition with methods such as contactless claims and mobile-enhanced services, insurers want the ability to implement these changes to keep up with the market. Insurance customers are not known for their loyalty – and being able to retain these customers is something insurers don’t ignore. The Greenfield approach would allow for insurers to enhance their products and services on technology that’s designed for just that – pushing out updates and new functionality to the market faster than ever before.
Leveraging new, cloud-based technologies when adapting to the Greenfield approach allows insurers to scale as they innovate. Rather than having to fit a square peg in a round hole with outdated legacy systems, insurers have the freedom to scale to the market at a rate they choose.
Considerations of the Greenfield approach
Greenfield offers to completely change the insurance landscape forever. With almost limitless possibilities, it’s no wonder insurers are getting excited about this. However, the approach has its own set of challenges insurers need to consider before making further decisions.
Partnering with insurtechs might not be an option
Insurtech startups often partner with larger insurers; and the benefits of this can be obvious – partnering with the disruptor (the start up) can enable the larger insurer to maintain modernity without being compromised in the market. The insurtechs benefit from significant investment too. However, partnering with insurtechs may not be how insurers want to innovate.
There’s a lot of testing involved
Greenfield, as it’s new and from scratch, involved a lot of testing to- get right. Without the foundation of a solid system, you may not be constrained – but some insurers may need these boundaries in order to operate among their own ecosystem efficiently. Without the capability to test, retest, and test some more – insurers will have problems further down the line with keeping up with changes in the market and customer base.
A new way of thinking is a must
While there are plenty of benefits with Greenfield, insurers must keep up with cybersecurity and fraud considerations when adapting to a new technology. The phrase ‘better the devil you know than the devil you don’t’ comes to mind, especially in such a risk-averse industry. Do you have the talent in house to implement such change? And are you able to sustain this new way of thinking in the organisation on a cultural level? The Greenfield Approach is not just a technology change – it’s a huge cultural change as well.
Overall, the pros and cons of the Greenfield approach balance out when you take into consideration both the risks and the benefits. It is a truth universally acknowledged that insurers must digitally innovate to keep up with the market; but how they choose to do this must suit what they already have. It may be that digitalising your current systems is the least disruptive compromise and innovate. Greenfield for some may be just what they’ve needed for some time.