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By Scott Kallenbach,Scott Kallenbach research director, LIMRA Strategic Research


Disruption is among today’s buzzwords, and used so often that it loses meaning. It frequently describes innovations regardless of their impact, as well as anything that presents even a mild challenge to an organization.

LIMRA defines disruption as having a more significant impact and includes things that can severely crimp revenue or have a crippling effect on a business or an entire industry.

In a recent whitepaper, LIMRA explored where the greatest disruption will emanate. Many cite new regulation, advances in technology, or changing consumer behaviors and expectations. However, LIMRA believes that new market entrants, like Ladder Life or Lemonade, are arguably the greatest potential disruptive threat to the financial services industry.

Specifically, there are three types of new market entrants that have the potential to disrupt incumbents, and can be classified by how they may enter:

New market entrants do not usually start out with the intention to disrupt. Rather, they see an opportunity or something lacking in the marketplace and they take advantage of it. Our analysis has shown that this type of disruption typically comes from outside of the industry.  These disruptors often benefit because that are not constrained by current or past practices.

What can insurers do to mitigate disruption? Doing nothing is not an option, nor can every company be a disruptor. The answer is somewhere in the middle, and actions must be taken. But which ones? Incumbent organizations can employ a number of different tactics to fend off disruption.

In today’s world, companies are likely to face some form of disruption – technological, regulatory and demographic changes spur disruption of the status quo. LIMRA has been studying the financial services industry for more than 100 years and history has shown that the most successful companies embrace the change and often lead the disruption.

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