How Insurers Can Prepare for a Digital Transformation
Many insurance companies recognize the importance of digital transformation. We’re relying more and more on technology in all aspects of our lives; why should our insurance be any different?
The stakes couldn’t be higher. Customers are looking for more personalized services that also incorporate more technology; according to IBM, 50% of customers prioritize a more personalized digital experience when working with insurance companies, yet only a fraction of insurance companies feel the same.
In order to continue meeting their customers’ needs, insurance companies need to look at how they’re incorporating technology into their core business. Yet, many insurance firms struggle to adopt digital strategies with business benefits in mind: Just 28% of businesses said that technology was central to their organization, according to Accenture.
Read on to learn about the challenges insurance companies face when it comes to digital transformation — and how to overcome them.
Digital Transformation Challenges in Insurance
Those in the C-suite know that strategy is far more difficult to deploy than develop, especially with teams that reach into the tens of thousands. When a strategy is accompanied by poor execution, the results can be less than expected. It can leave stakeholders feeling like they should have saved the company the heartache and money to avoid a disappointing outcome.
In order for insurers to launch, manage, and govern their digital transformation, they need to have a strategy they can execute. They can do that with the Start-Structure-Scale framework. This method gives stakeholders a way to incorporate their digital transformation goals successfully. Stakeholders can start this process by making sure they avoid these pitfalls:
- Unbalanced focus on technology
- Motivational mismatch
- Trying to do too much at once
1. Unbalanced focus on technology
AI, chatbots, virtual assistants… There are new technologies that become available seemingly every year. Platforms and technologies that allow businesses to create end-to-end solutions are understandably tempting, and customers are eager to see them in their interactions with companies.
A study from Salesforce found that 75% of customers want to see new technologies. But putting too much focus on new technology can set up a company to fall short of its digital transformation goals.
There are other elements companies need to focus on to achieve their goals, including people and process. Focusing on people looks like creating small, focused teams who can collaborate to discover solutions to business problems. As for process, switching to an Agile framework can allow for more collaboration and feedback, ensuring that you reach the best solution the first time.
2. Motivational mismatch
The irrational aspect of change is the idea that we can be motivated by something more than, or different than, logic when coming to business decisions. If executives ignore the irrational aspects of change, they may find that they fall short of their digital transformation goals.
Another way to think about it is a bottom-up approach, as employees are likely motivated by different factors than managers or C-suite executives. When executives listen to the motivations of their employees, they are better able to tap into the changes that need to be made. As a result, they also have employees who are more invested in making those changes with them.
3. Trying to do too much at once
When rolling out a large digital transformation, you may want to get it over with all at once, right? But think about what that means for the teams implementing those changes. They need to move to a new platform or learn a new process for how to complete projects, or potentially shift their focus to new goals or incorporate new technologies. With so many moving pieces, stalls are bound to happen.
How Insurers Can Overcome Digital Transformation Challenges
In order to avoid these pitfalls, insurers can ask themselves these questions: What capacity (time, money, people) do we have for digital transformation? How far can we go with digital transformation?
Asking these questions will help insurers learn how they can transform their business model. For instance, an insurance company may want to develop an app to help its customers with filing claims — a good idea, as more consumers are looking to file their claims through digital means instead of in-person.)
How can the company go further with that? The company could make it part of an omnichannel strategy, allowing customers to start a claim on their phone and finish it on their tablet. Or it could automate the process, creating more efficiency in the system.
Digital Transformation in Action: MS Amlin
MS Amlin, a specialty insurance company based in the UK, valued its intimate relationship with its clients. When clients voiced their desire for a process that was faster with less paperwork, MS Amlin had to develop and implement a digital transformation strategy.
MS Amlin knew that in order to stay competitive, it had to transition to a digital-first process. It digitalized its entire underwriting process, giving the company the ability to standardize its products. It also created a self-service online portal to address its customers’ needs. Using the online portal, customers could choose the option that fit their needs best. And because the process was fully automated, it saved both customers and the company time. The self-service portal also gave MS Amlin some secondary benefits from upselling and cross-selling opportunities.
They were able to achieve their goals thanks to a combination of platform, people, and process. “Having a digitally focused team sitting in the heart of the business has been fundamental,” said Katie Wolff, head of digital trading. And by using an agile workflow – that’s the process – the team was able to update key stakeholders throughout the process.
MS Amlin is just one example of a successful large-scale digital transformation in insurance. To learn how other insurance companies can benefit from digital transformation, check out more customer stories.
This post was originally published on January 25, 2017 and has been updated.