Exploring How Insurers Can Overcome Barriers to Sustainable Innovation
The insurance industry has dramatically evolved over the past several years as insurers increasingly recognize that it’s time to pursue change. This imperative has broadly become known as digital transformation. The need for agile workflows, improved data access and processing, and advanced data analytics to improve risk assessment and inform decision-making have long been understood but accomplishing these initiatives across the organization remains a significant challenge.
The COVID-19 pandemic has increased the pressure, as many businesses continue to operate remotely. Insurers are now more incentivized than ever to have their digital processes in place and running smoothly.
During our recent Connected 2020 conference session “Digital Transformation: Taking it to the Goal”, Aite Group Senior Advisor Jay Sarzen shared the main impediments to digital transformation for insurers.
- Failure to align priorities. Organizations need to put their money where their mouth is. Without investing the time and resources to implement a digital strategy, insurers are likely to see slow acceptance, slow adoption, or worse, nothing at all. When a company aligns its goals with its funding, only then can measurable change take place.
- Lack of executive buy-in. Digital transformation cannot begin and end with the IT department. Buy-in must come from leadership if an organization hopes to see lasting change. Executives must clearly outline how their organization will adopt a digital transformation strategy and define how employees can implement these changes. This approach requires ongoing knowledge sharing, structural change management, a continuous feedback loop, departmental or individual accountability to drive transformation, and organization-wide involvement.
- Resistant culture. Similarly, employees must be given the tools and guidance to adopt these new changes. Executives should be clear on the steps stakeholders must follow, and also provide employees with a structured environment that takes these changes into account. Successful transformation can’t occur if there is insufficient communication throughout an organization.
- Fragmented strategies. Insurer’s digital transformation strategy needs to be an overarching structural change. This ensures digital transformation is embedded into the corporate strategy and trickles down into each department. A lack of departmental collaboration leads to misalignment which can be particularly problematic for insurers with so many lines of business.
- Antiquated Legacy Systems. Unlike the previous impediments, which can be resolved through strategic solutions, this is purely a technological barrier. Older core systems cannot support the agility and flexibility required for digital transformation and insurers must upgrade to a new platform in order to pursue ongoing innovation.
Session panelist Jeff Rielly, solution consultant at Insurity, shared his insights on how digital transformation is redefining the customer experience. Insurers are creating new opportunities to interact with insureds in a marketplace that insurance companies alone don’t define anymore. Instead, it’s being shaped by everyday consumer experiences, from online to in-store interactions.
Today, insurers are developing experiences that are characterized by three key traits: ease-of-use, self-support, and the ability to react to the market.
“Ease-of-use” means that products have to be responsive, allowing customers to get what they want, when they want it. Instant gratification is a staple of the purchasing experience across a majority of industries and insurance must keep up.
Insurers also need ease-of-use on the product development side by leveraging self-support tools to streamline new customer experiences. Establishing the maintenance for new experiences requires innovative tools that provide flexibility and agility in achieving business goals.
Lastly, insurance companies must respond to their respective markets with new and innovative insurance products. The change in how insureds live, work, and play creates a number of new risk profiles that call for insurance products. For example, the sharing economy spawned Airbnb and Uber, both of which required unique insurance coverage that had never been considered before. Insurers’ ability to develop these policies quickly is the difference between success or failure.
While there are a number of impediments facing digital transformation, one of the best ways to overcome these is to continuously innovate. Insurers need to be able to adapt to the ever-changing marketplace, which requires new products, tools, and solutions to provide customers with the best options available. By focusing on improving the customer experience, insurers will find themselves at the forefront of digital transformation.
More information on Insurity’s Digital Services Platform and how it can help insurers support their digital transformation journey can be found here.