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Digital transformation is gathering momentum across the insurance industry, disrupting organization structures and transcending traditional ways of doing business. A look behind the screen will reveal five drivers that are fueling change for insurers:
A move from product to client centricity: Traditional insurance organizational structures are built along product lines and processes, rather than customer relationships. Today however, insurance companies must break through technological and cultural barriers to meet customers in the digital world. There is an eagerness to deliver intuitive, simple, relevant, secure, and personal experiences that offer both choice and value. Inspired by industries that are successfully delivering customer delight, new product propositions are designed with the customer at the center.
Business and IT must cohesively work together: For digital transformation to succeed, business and IT need to pull in the same direction. Change will result from a shared vision for client-centric and personalized products and services, along with the courage to explore new ideas and an openness to allow failure. This is a big cultural shift for insurance organizations that tend to be conservative and risk-averse. The focus for many insurance companies today is on transforming IT from a cost center to a revenue driver, adopting an analytics-driven approach to target customers with relevant products at the right place and the right time and creating customer journeys that translate to revenue growth and a better customer experience.
Streamlining point data solutions: Digital transformation implies interconnectivity between all systems and processes at every level of an organization. Insurance companies have to break down siloed and point data solutions housed in legacy data warehouses to enable access to the larger volumes, variety, velocity and veracity of data available through internal and external sources. It is key to automate, streamline and simplify processes for customer experiences that can shift depending on personal preferences and regulatory requirements. The way ahead is for CIOs, CDOs and IT to define appropriate data strategy and manage compliance to data privacy and General Data Protection Regulation (GDPR).
Supporting innovations: True digital transformation starts with the customer and works inwards. By nature, it blurs boundaries between different teams and functions, and back offices play a major role as enablers can provide real-time data that support predictive decisions. To unlock the value of this data and disruptive technologies—such as machine learning, artificial intelligence, IoT and blockchain—insurers need to promote innovation through a combination of in-house labs, partnerships and investments with InsurTechs to leverage insights in real time.
Courage to change: Embarking on a digital transformation journey can be challenging. The only way to explore new and fundamentally different ideas is by being open to change and rethinking previously successful traditional business models. It involves critically assessing legacy systems and adapting new systems of engagement, most likely built around cloud technology, and change existing strategies to fit into a digital world.
How can technology help?
These drivers present challenges to insurers, and their traditional methodologies of software development will not serve the needs of the digital age. In the three-to-five years that it takes to approve and implement core system modernization, the market races on.
Newer agile methodologies offer speed and flexibility that enable businesses to make incremental changes, adjust course based on continuous feedback, and evaluate efficacy. It also allows simpler strategies, smaller budget commitments, less risk, and improved ability to quickly launch new products and services without disrupting core systems. Here is what a successful front-to-back approach will look like:
- Start with the customer
A holistic customer experience is not merely redesigning the touch points where end-clients, brokers, underwriters and claim handlers interact with the company. A true omnichannel experience would allow users to move between channels at their own convenience without having to repeat any steps in the customer journey. This entails creating a strategy that spans the front, middle and back office that starts from what will work for the customer.
- Smart engagement
A system of engagement powered by a system of intelligence would be underpinned by analytics. Data-driven decision making, and, ultimately, data-informed cognitive intelligence achieves a much deeper understanding of customers and enables the system of engagement to move beyond the basic segmentation widely used today. A successful digital transformation integrates high volumes of data to predict, influence and respond to customer behavior. Besides enabling the right next-best action, it will facilitate rich, intuitive, context aware, hyper-personalized customer experiences.
- Microservices based architecture
A service catalog based on a deep understanding of customer-specific opportunities for digital disruption would identify the list of business services that the system of record provides. New technologies will drive the strategy, design and testing of digital solutions. Services decoupled into microservices can be wrapped around existing back-end systems and mapped to application program interfaces (APIs) for communicating with external platforms. Approaching a digital transformation incrementally with the aim of ensuring continuous and effective evolution will deliver true value without breaking the bank.
Tying it all together
The future is hyper-digital, real-time, personalized, and channel-agnostic. It is crucial for the whole organization to transform, but winning organizations will achieve speedy and disproportionate value through cost-effective programs, business and IT alignment, front-middle-back office alignment and metrics driven business—all elements of success for a future-ready business.