According to McKinsey, the tech-enabled insurer of the future will bear little resemblance to the institutions that exist today.
By Yunus Scheepers, chief technology officer at SilverBridge Holdings
Digitalisation, cloud computing, robotic process automation, and the Internet of Things are just some of the elements influencing the direction of the industry. But perhaps the most crucial is how changing customer expectations puts the pressure on insurers to adapt to become more digitally-driven.
Whether it is claims processing or underwriting, analysing data or developing personalised solutions, insurance has moved beyond the traditional paper-based environment. It has become an industry that more intelligently modernises processes and systems to extract maximum value from the massive amount of data it has on hand.
A transformed landscape
EY believes that for insurers to undergo an effective digital transformation, they must remain cognisant of eight components. These include the cloud, intelligent automation, advanced analytics, the blockchain, cyber risk, and digital architecture.
Central to this transformation is the notion that insurers must become more agile and adaptive to change than ever before. The past two years have seen customers grow increasingly aware of the service options available to them. It is less about the bells and whistles of any specific technology and more about how the insurer uses these technologies to unlock value for customers. Therefore, one of the keys to successful digital transformation is an ability to identify, and a subsequent willingness to embrace, technology that delivers on customer expectations.
Another element is how the insurer goes about modernising legacy processes and systems that were critical building blocks in shaping who they are. Digitalisation is about more than just ‘ripping and replacing’ everything; it is as much about a change in mindset as it is about changing or evolving the organisation’s core technologies and processes.
It is getting personal
This change in employee mindset is not easy and requires a deliberate intervention. If employees do not understand the reasoning behind digitalisation or how to use the technologies being implemented, then projects become significantly more challenging to complete successfully.
Research shows that three critical factors are needed if digital transformation is to be successful – team communication and collaboration, workplace relationships and team identification, and team adaptability and resilience.
The golden thread tying these together is clarity of communication. In this way, employees will understand why they should embrace skills development initiatives and that they should expect a potential shift in their key focus areas. For instance, if automation is incorporated, which will take over manual, time-intensive tasks, they must realise that their roles will evolve to focus more on delivering strategic value and that they will be trained and coached to do so.
Deloitte writes that companies can now create digitally integrated, ‘on-demand’ teams capable of tapping into and collaborating with extensive networks of innovators, technical experts, and seasoned professionals from all over the world.
Deloitte cautions that even if leadership is on board, getting a company to fully embrace a digital strategy as a culture can remain challenging, especially for traditional businesses like insurers. They typically find that there are still employees who prefer ‘old-fashioned’ methods of phone calls or in-person meetings. It comes down to how the insurer will manage this balance between the old and the new. Finding a good digital culture that does this while aligning with the culture of the enterprise becomes even more important than the technologies being used.