Despite insurers increasingly embracing digital transformation as a goal, the reality is that many of them are coming up short.
Even amongst carriers more advanced in digital maturity, there are challenges. These carriers partner to innovate, but sometimes these partnerships miss the mark, lacking the cohesion necessary to integrate with their broader business model.
What are the building blocks that can help carriers pull it together for a successful digital transformation?
First, carriers need an environment where it isn’t as costly and risky to test and learn. According to the World Insurance Report 2019 from Capgemini and Efma, more than 55% of customers are interested in exploring new insurance models, but only 26% of insurers are actively taking steps to meet this emerging demand. Though carriers are increasingly interested in testing new distributions models and augmented product offerings while taking a more proactive role in the customer experience across the lifecycle, the reality is more complicated.
Carriers saddled with monolithic legacy systems are not in position to readily test these concepts and learn from them. System limitations inhibit a carrier’s business agility, and further constrain the ability to drive organizational readiness to change.
And while many carriers have adopted Agile with varying degrees of success, Agile alone will not result in a profitable transformation. Clearly, speed to market is important, but carriers are likely to fall short in the future if speed to market doesn’t go beyond the carrier’s existing business and product model. Going agile alone will not guarantee the opportunity to rapidly test and learn.
Second, it’s critical to get your data systems, analysis and collaboration tools in order. In most cases, valuable sources of data are siloed across different systems, resulting in an inability to provide reliable, actionable insights. The best carriers can do is to intensely labor over gathering sources of data together in the hopes of yielding a reliable answer to a question.
With 37% of customers reporting a willingness to share more personal data to receive more personalized services, it’s the right time for insurers to create a useful, usable data ecosystem. This will help them successfully manage emerging risks, identify and capitalize on new opportunities and to tie it all together with an exceptional customer experience.
Third, the investments made in customer experience scratch the surface of what’s possible – and what could be game-changing. Many carriers have implemented new roles and functional areas dedicated to customer experience, but this is not supported by an efficient operation on the back-end, resulting in operational overhead. Additionally, customer experience teams consult with the business, but don’t have backing or supporting data to make decisions that affect the broader change needed.
Fourth, carriers need to figure out how to redirect investment to make transformation a profitable reality. Unfortunately, the increasing pressure to contain costs is at odds with a desire to innovate, as carriers are not always able commit additional funding to support transformation. With IT spend expected to remain flat among most carriers in the foreseeable future, how can they fund transformation?
It’s a lot to juggle, so where do we start?
First, you need to understand where you are in terms of your transformation. Is it disjointed? Do you know how all the pieces fit together? As part of that, you should have a point-of-view on how you want to tackle the building blocks:
- The ability to test and learn is crucial. Is your technology stack limiting your ability to test and learn?
- Data to support decision making is more important than ever. Do you know what kind of data/insights you want to generate to make the right decisions in the future?
- Tie the customer experience together. Are your efforts permeating throughout the organization?
- Funding is critical. What’s your strategy to fund transformation?
Many carriers are talking transformation, and perhaps crawling toward it. Have you considered how these fundamental building blocks will help you walk and eventually run away from the pack?
To continue this discussion, connect with me on LinkedIn.