We need to move past the buzzword to strategy
The Insurance industry has been under a great deal of transformative pressure lately, primarily in how we deliver our products and services to our customers and distribution partners. In that context, there has been a rash of buzzwords floating around the industry, with new ones added seemingly-daily. One of those buzzwords has become especially common as the world suddenly had to find ways to work remotely, and that’s Digital Transformation.
While we may hear the word and not bat an eye, do we really know what it means? After all, we have been moving in a digital direction for years, so why the sudden attention?
The idea of Digital Transformation is not simply about going paperless or allowing customers to manage their policies online or through a mobile app for example, though these are valuable and components of a transformation. The idea itself is bigger than that.
What it really means is looking at how you develop, market and service policies, and finding a fully-digital path for all of it. That includes employing tools and approaches that are flexible, responsive and scalable.
What does this look like in practice?
Digital Transformation means starting with a different relationship between the business and technology functions than we have historically enjoyed in the industry where one serves the other, and each is separate. Instead, starting with a collaborative, integrated approach where IT is engaged in the strategic vision of the business, and working hand in hand with functional leaders on the path forward. Mixed teams of people from the business and technology functions jointly problem solve, implement, test and refine solutions iteratively together (and better yet, with customers).
It also means underlying your technology with flexible, scalable tools deployed through the cloud that are built to connect to each other through APIs (Application Programming Interface) so you can more-easily add to your capabilities without the need for heavy integration efforts or being stuck with a sea of screens and windows on everyone’s desktop.
The kinds of tools to deploy enable more straight-through processing, removing steps, side processes, rekeying and reconciliations across and between systems, or the need for in-person actions like physical check production and signing, mailing and scanning documents or having to send someone on-site to the insured to inspect or evaluate property. We see tools enabling these kinds of things coming to market rapidly now, like those allowing insureds to self-inspect their vehicle or property post-loss, digital payment solutions, electronic document signing and more.
To take it a step further, you can rethink your products themselves, and look at whether the way they are structured, the things they cover and how they cover them are inherently holding you back from being more digital. An extreme example of this is looking at parametric coverage solutions in place of more traditional ones where adjusting can be highly – if not completely – digitized and automated. An event verifiably occurs, the value of the loss is predetermined in the policy itself, and a payment is automatically issued.
A less stark example could be in thinking about how your existing Commercial Lines products, like BOP, E&O or GL, apply to businesses that are fully-digital. Here, the transformation is less about how you as an insurer operate digitally, and more about how you as an insurer serve those who operate digitally. This becomes more extreme if you think about something like autonomous, shared vehicles. While it may be decades away, one day, people may not hold personal auto policies with that exposure moving into the commercial, product liability space. If you are heavily engaged in Personal Auto insurance and are not thinking about transforming you product offering along with the market, your position in the market will be threatened.
Digital Transformation ultimately is about two major shifting paradigms we as an industry face. First is how we work – our efficiency, ability to meet changing customer expectations, and whether our processes and systems are helping or hurting employee engagement – is important and usually the main driver of Digital Transformation. Longer-term, though, the second shift becomes more critical as the world around us is also transforming. For us to stay relevant in an economy that looks different from today, we must create offerings that speak to what that economy truly needs as it, too, transforms digitally.