At a recent social gathering, casual conversation turned to trends in product development (all industries).
In passing, I happened to mention that many insurance companies today call themselves manufacturers. Turns out, everyone was just fascinated by that idea, or at least by their understanding of the idea.
The ensuing exchange made me realize how dramatically the insurance business models have changed and how little the insurance public knows about the industry that wraps their multiple risk exposures.
First, more about the conversation. One couple asked many questions about this "insurance manufacturing," as they called it. From the give and take, I began to realize that the M word was being interpreted as nuts-and-bolts manufacturing–the making of something from raw materials by hand or machine, as the Merriam Webster Dictionary puts it.
The couple even wanted to know if people can go someplace to watch this insurance manufacturing going on, as they do with, say, candy manufacturing.
Before you ask, the answer is no, these people were not dunces. They just did not hear the M word in the way some insurers use it. They thought companies had created some type of physical process associated with making their products.
"Well, if it is not that, what is it?" they wondered.
We talked about how insurance firms do indeed have a process for making products but that this is not done at a factory or with heavy machinery. It's done with computers and brainpower. We talked about how certain firms use manufacturing as a metaphor for building, rolling out and supporting their intangible products from the "raw materials" of time, talent and business tools.
"But why do they call it manufacturing?" they persisted.
That is a good question. It's doubtful the answer will be of any value to consumers, but it is certainly one that impacts people inside the industry–because the answer reflects an emerging business model in the industry.
