Insurers know the future is digital.
According to recent research by Gartner, close to two-thirds of the world’s biggest insurance companies have already invested in insurance technology start-ups.
By 2018, 8 out of 10 property, casualty and life insurers will have joined them.
When it comes to the digital transformation of their own businesses, however, things are more difficult. It is, in fact, perhaps the key challenge facing the insurance industry today.
As important as insurers’ digital strategy is, it is not in itself the business strategy.
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It is a tool, an enabler. As Accenture puts it: “Insurers should not focus simply on using more technology, but rather on enabling people – consumers, workers and ecosystem partners – to accomplish more with technology.”
It starts with people, then
Insurers need to understand the needs and priorities of the people at the heart of the digital initiative to develop their approach.
Technology magazine Wired’s editor-in-chief recently told insurers they must “think like a start-up if you’re to avoid being Uber’d”.
Most are not start-ups, though. They have to take time at the outset to analyse – and ask – what their existing customers, stakeholders, employees and executives want and need from digital transformation.
It relies on data
Internal and external data will help insurers identify where the greatest value from digital initiatives will be found.
Digital disruption affects every part of the insurance value chain: products, marketing, pricing, distribution, claims.
Insurers need to use external digital analysis, customer experience and empathy mapping and digital value chain analysis to inform a process of segmentation and targeting, and to define their value proposition and goals.
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Insurers already have much of the data they need, particularly in terms of customer behaviours and attitudes. They already have “incredible insight”, as Aviva’s chief digital officer puts it.
The challenge is capturing this from silos across the business and turning it into actionable intelligence.
You need a roadmap
Digitisation is changing markets quickly.
With the threat of disruption from new entrants, new products enabled by the Internet of Things, and changing customer behaviours and expectations, there has to be an urgency with digital initiatives that will the prevent falling behind and losing market share. As others have noted, the race is on.
This can’t come at the expense of a long-term plan that takes account of how customers and markets will evolve in future, however.
Insurers, therefore, need a long term vision, as well as road maps for strategic initiatives and business imperatives. All 3 need to work together.
This requires a digital framework
The framework allows the company to addresses digital goals and objectives.
It will show how initiatives to meet short term business imperatives will be met, but also how these will change over time and how they link with your strategies.
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The framework will address how projects today will fit in with the vision of the future, and the methods – on premises hosting, using the cloud, software as a service – that make most sense to get there.
Define the digital scope
There is no escape from considering in detail the company’s approach across digital.
It is not just about what the business does, but how it presents it.
Aviva, pursuing its “digital first” strategy, for instance, has seen “a complete reframing” of the way the company engages with customers, according to its brand director.
Insurers must outline the purpose, objectives and key initiatives and challenges in all the key areas: Website, branding, online content, digital advertising, contact management, social media and mobile.
They must also determine what needs to be conducted in-house and what can be outsourced.
Get it right first time
Execution and governance are essential to success.
Too often, lofty ambitions are not borne out in practice.
That’s because organisations bite off more than they can chew, starting with a grand, transformative project that takes too long to provide meaningful returns. The result is compromises that undermine its value.
If the end result is a disappointment to consumers or users, they’ll be reluctant to try later iterations.
Big visions and objectives, therefore, need to be segmented into small, deliverable projects that provide valuable functionality.
That’s not to say the digital challenge does not require big changes. It does. But on the way there, each step counts.
Sourced by Ian Betley, head of financial services international sales at DST Systems