How insurance companies can assess and develop their resilience
Research project conducted in collaboration with renowned business school INSEAD and Heidrick & Struggles, the world leading HR-consultancy. The project was carried out between May and December 2021.
What was the response of large insurance companies to the disruption wrought by COVID-19? What can we learn from it? And how can organizations use this knowledge to navigate crises of the future?
The Western economy has endured many crises over the past two decades from 9/11 to the global banking collapse and the Euro bond crisis. All these events created their own shockwaves and taught those of us in the insurance sector much about resilience. Yet nothing could fully prepare us for the global disruption of the pandemic. The uncertainty it created, which we continue to work through, is so profound that we can’t rely on existing recovery models. We need fresh insights and knowledge. And we need a new resilience map to better understand how to develop and strengthen our organizational resilience.
That’s why we’ve been engaged in detailed academic and empirical research undertaken with 44 C-level executives across 13 companies. And through 15 scaled measurements across resources, system orientation, culture and leadership, we have created a map that provides you with a valuable reading of where your organization stands on the resilience spectrum. Crucially, it also identifies your opportunities for improvement.
Our map is based on the understanding that there are three key stages to resilience:
1) The anticipation phase, prior to the emergence of a crisis.
2) The coping or ‘bouncing back’ phase.
3) The adaptive phase, the opportunity to jump forward.
We also looked at what the successful outcomes for a truly resilient company are. The first, most obvious one, is the financial outcome – the extent to which revenues and earnings are protected in the coping stage, and then grow in the bouncing back phase. Then we have non-financial performance indicators such as service levels or employee and partner engagement. And then there are wider recognition outcomes such as whether a company’s culture shows an increase in its self-esteem or self-confidence, or makes reputational gains with the broader public.
Organizational map for reviewing and improving resilience
The resilience map
So where does your organization sit on this map? What are the levers you need to pull to increase your resilience in a world that continues to face extensive disruption? And even if you’re scoring high, are there areas of potential improvement?
One key takeaway from our research was the that the stronger an organization’s community is in terms of aligned autonomy, the better it will be at bouncing back. The chief transformation officer of a South African insurer told us: “I was most impressed by the response to the crisis – that moment when it became real, the galvanization and the united alignment behind our purpose. People took up new roles to live up to our purpose.”
However, in some cases, that very ability to bounce back thanks to a strong community orientation can also stifle a business’s ability to bounce forward, because a community committed to remaining united can be resistant to change. To emerge from a crisis with a competitive advantage, companies have to take risks and accept that nothing will be as it was before. The companies who say ‘yes, we have this community but we’re also venturing into uncharted waters, and we’re going to try new things such as launching new innovative products, acquiring companies or completely reorganising ourselves’ tend to bounce forward strongest.
The COO of a US insurer told us: “The pandemic was a ticket to heaven for us. We led with vision and were very bold in our investments during the pandemic. Thanks to our very open and engaging culture, we could do this.”
Decentralization and flexibility
There were other over-arching themes. Companies that decentralized their decision making and encouraged greater flexibility proved more resilient because they were faster to act.
As the COO of a US insurer told us: “The successful management of the crisis was to a large degree due to the choice and flexibility we gave to our employees.”