2009 Vertafore Industry Forum

Vertafore had their first (insurance) Industry Forum  July 9-10, 2009. The event was held in Seattle and sunshine was the order of the day for the event.

Why hold this august gathering? (Obviously that sentence would have worked out even better if the event was actually held next month). Vertafore has been an active acquirer over the past several years pulling ImageRight, AMS Services – which itself acquired Sircon last year – SilverPlume and BenefitPoint into its collection. Insurance industry pundits (analysts, consultants, and press) and Vertafore’s clients wanted to know where all this was leading.

From my perspective, Vertafore has major challenges in at least three domains they need to resolve before making significant headway:

1. Answering Kimberly’s question
2. Balancing brand and relationships
3. Auditing and adjusting

First: Answering Kimberly’s Question

My analyst colleague, Kimberly Harris-Ferrante from Gartner ( please note we work for different firms ) very astutely asked a key question at the event: what does Vertafore want to be when it grows up? This is critical. Without being able to answer this question, they will not be successful in whatever they want to accomplish.

To begin to answer her question, Vertafore needs to think through: 

• Do they intend to focus on channels, insurers or the value chains connecting these two interdependent actors? And in what way to achieve what value add for either the agencies or insurers? In other words, what will Vertafore bring to the party? Why should they continue to exist?
• How will either the agency channel or insurance industry structure change in the face of this ongoing financial crisis (which could lead to insurance industry consolidation, more insurers becoming single segment providers rather than offering multi-line coverages), shifting demographics (i.e., Gen X is  in the workforce; Gen Y is pouring in as we speak) and technological changes enabling faster connectivity from just about anywhere.

Two: Balancing Brand and Relationships

Each of the companies in Vertafore’s portfolio has some degree of brand recognition in its own right. Three of the firms – AMS Services, Sircon and ImageRight – are well known in the insurance industry. Vertafore  is planning to strengthen its own brand in the insurance marketplace. However, they must achieve this in a way that 1) doesn’t dissipate the brands of its subsidiaries and simultaneously 2) builds and strengthens relationships the company wants with its clients. 

But in the insurance space, particularly working with agencies there is a kicker that has to be taken into play. And it has to with relationships. Because in insurance, relationships are crucial. The emerging digital marketplace notwithstanding, relationships – or the lack of them or the lack of strong relationships – will knock an agency or  insurer off of its leadership position.

Insurance is a relationship business whether from the perspective of agents with their clients or from the perspective of agencies with the technology firms that support their agency operations. Or from the perspective of an insurance company with the technology firms it decides to do business with.

Brand and relationships: two interdependent forces. Either one is necessary but you need both to have a sufficient solution.

Three: Auditing and Adjusting

This domain of challenges encompasses the need for Vertafore – writ large to include its current and future acquisitions – to continually audit what they are doing and what they plan to do against the ever-changing marketplace around them. Competitive dynamics, obviously. But keeping on top of what their current and targeted clients want, need and expect is mandatory. That is the ‘auditing’ processes.

The ‘adjusting’ processes are not as straightforward because they include more than just having the skills and competencies to use newer technologies (i.e. cloud computing) or enhance Vertafore’s existing technology solutions. Adjusting successfully means having the cultural will to change what the firm is doing even if it appears to be successful now. Adjusting successfully means not falling into the ‘innovator’s dilemma’s trap’ that was so wonderfully discussed by Clayton Christensen’s  1997 book “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fall.” At issue is whether Vertafore has or can strengthen a culture of change particularly when they might arrive at a moment of being very proud of their solutions and services.

Wrapping Up

I’ve listed three domains of challenges – vision (what really is or will be Vertafore’s value add to the insurance marketplace), strategy (balancing brand and relationships), and tactics (auditing and adjusting).

Obviously there are at least two other domains – operations (the initiatives and processes Vertafore needs to shape and execute in support of its strategy and vision) and controls (the financial processes and protocols as well as the infrastructural support Vertafore needs to underpin the entire set of value chains).

Overall it was a very good event. I learned quite a bit and met several people from Vertafore and some of the companies it has pulled into its orbit. It will be very interesting to see how Vertafore moves forward in pursuit of achieving its competitive position in the insurance marketplace.

What do you think? Will Vertafore succeed – why or why not?