Connect with us
Subscribe to receive industry insights, news and more by emailSubscribe Here
4 key considerations to drive digital transformation in insurance
New technologies have been the catalyst for change across the insurance industry, including the life, health and protection sectors. They bring with them new capabilities and the opportunity for forward thinking insurers to deliver exceptional results for both shareholders and customers. The change has been driven by rising customer expectations and insurtech firms disrupting the market. It’s now clear that delivering successful digital transformation is a necessity rather than an option for insurers. So, how do you create a culture where innovation becomes integral to the DNA of the organisation and supports the delivery of the benefits offered by transformational technologies?
1. Taking a strategic approach to innovation
Organisations that want to implement large-scale change must take a strategic approach to give transformation the best chance of success. Your strategy should consider aligning areas of innovative focus with your overall strategic objectives. Then, by identifying where in your company you want to innovate will help define and clarify how you will achieve it.
You’ll also need to provide your teams the tools they will require to innovate and enhance their innovative capabilities. Consider how you will set up and manage your innovation system and which methods you will use to promote innovation within the organisation. You may also benefit from some change management around communicating the significance of innovation and the positive difference it will make to the company.
2. The role of IT in innovation
To successfully innovate and realise the value of new technology investments, organisations will need to align IT with the business strategy. Your IT department need to know your company’s goals, objectives and what their responsibilities are. Your IT department will impart information about what your IT capabilities are and how new technologies will fit into your current setup. You can then use this to decide which technology to introduce and to develop your future strategy.
Removing silos and bringing together business departments with IT, by introducing agile development methodology, will improve communication and encourage innovation. Having the right people in the room at the same time reduces the opportunity for fragmented development. Issues will be addressed as they arise and ideas for improvements generated by a hive mind approach.
3. How to overcome obstacles to innovation and digital transformation
Sometimes companies concentrate more on the physical aspects of innovation and introducing new technology than they do the ‘people’ element. The implementation may fail if you don't consult those who will be affected by the changes or consider the impact on them.
Lack of buy-in
If your staff don’t understand why you are introducing new technology, then they are unlikely to buy into it. Having board representation and vocal, tech-savvy leadership showing commitment to the change will increase your chances of successful implementation.
Although innovation and digital transformation needs championing by the board, you can't leave it to one or two people to drive it forward. Appointing a steering group with representatives from all departments will help you gather and circulate crucial information. Use it as a forum to ease the concerns of your staff and communicate the advantages the new technology.
Perceptions around a reduction in workforce
Your staff may have concerns that introducing technologies like AI and machine learning to automate routine, admin-based tasks will mean a reduction in jobs. However, it is important to clarify it will create a shift in skill set rather than an overall headcount reduction. For example, staff will require technical and high-level customer service skills because they will be freed up to deal with more complex work. Additionally, an increase in data analyst numbers will counteract a drop in traditional support function roles. Data analysts will interpret data sets and provide analysis to improve decision making.
Not knowing what to do with legacy systems
One of the most common points of resistance to innovation in life, health and protection insurance revolves around legacy systems. Having already invested large amounts of money in current systems, you may be reluctant to get rid of them. However, by leveraging cloud technology, you can integrate your legacy systems with new technologies rather than rebuilding your IT structure from scratch. You can then benefit from cost savings, improved processing times and Big Data analytics.
4. The critical importance of positioning the customer at the centre of your innovation efforts
As rising customer expectations have driven the life, health and protection sectors to adopt new technologies, innovation needs to focus on improving the customer experience. One approach is to work as a partnership with your customers to manage their lifestyle and health. For example, companies like Vitality offer rewards to customers who live healthier lifestyles and track their activity.
Life insurance companies have traditionally provided support for customers after something has happened. Some, such as yulife now encourage preventative action instead using a combination of wearables, challenges and incentives.
More and more medical and health management apps are being created which help customers better understand their health conditions, medications and achieve their fitness goals. The apps allow insurers to engage more regularly with customers, identify when their needs change and make appropriate offerings.
The data collected by insurers through these technologies is then used to personalise product offerings and reduce premium costs. As the customer experience improves, so does customer loyalty and retention.
Introducing new technologies brings benefits including cost savings, improved organisational efficiencies and increased customer retention. However, without a well-considered and executed innovation programme the possibility of realising those benefits diminishes significantly.
If you want to join an industry-wide discussion about leveraging digital to drive innovation in the life, health and protection insurance sectors, join us for TINtech Life & Health on 3rd December 2019 at Etc. Fenchurch Street.