Skip to Main Content
Three Secrets for a Successful Digital Business Transformation

Insurance
Three Factors Needed to Help Insurers Become Digitally Effective

Defined as "gloomy” by the IMF, the global economy is undoubtedly in a precarious position. Major economies around the world are facing a bleak, uncertain macro-economic environment as a looming recession and cost of living crisis threaten to coincide.

In addition, there is also a wider cultural shift in attitudes towards work and greater employee attrition on a global scale. Coined the “Great Resignation”, large swathes of employees in virtually every sector and country have begun to reassess their financial situation, life goals, and overall job satisfaction. Upon careful introspection, many employees have decided to change jobs or venture into new careers in search of higher wages, more flexibility, and greater work-life balance.

It’s important to remember that the insurance and financial sector does not operate in a bubble. Despite global GDP growth of 5.8 percent in 2021, the sector is still facing the dual challenge of high employee attrition and rising cost of capital. These factors, amongst others, are making the cost of doing business more expensive.

In light of the current economic conditions, organizations are increasingly looking to become more efficient with their finances and resources. Equally important is the question of how insurers can become more effective from a digital standpoint. Yet, insurers must address three key considerations: people, process and technology. Tackling each can help insurers become more digitally effective and weather remaining economic challenges more effectively at the same time. Read on to learn more and discover the hidden potential in your firm.

The process

One of the first factors for insurers to consider is their business processes. One important example is the customer journey, or, how insurance companies interact with their customers.

Insurers are battling poor customer perceptions as their products are considered to be a ‘grudge purchase’ or necessary evil (e.g., to legally drive your car, take care of your family, etc.). Historically, two critical interactions drive these perceptions: policy renewals and claim submissions. If insurers want to improve their customer relationships, it is vital to shift away from this narrative and strive for a more helpful brand image. For example, by offering bespoke products to meet customers’ unique needs.

To build this new image, insurers must abandon the transactional mindset that is prevalent across the industry today and adopt a product mentality instead. Insurers with a product mindset continually learn from customers’ changing needs and pivot their strategy to capture and retain more customers. And so, insurers must embrace three core principles:

  • Be customer focused

    Unlock value to the customer as quickly as possible

    Commit to ongoing product development

While being customer-focused and quickly delivering new market value are self-explanatory, determining what is of value to the customer requires some consideration. Customer value can be identified through a variety of tactics, including customer panels (qualitative feedback) and data/analytics (quantitative feedback). The aim of each is to understand where customers have unmet needs.

Using the right key performance indicators (“KPIs”) to measure customer value will aid in prioritizing which pain points should be addressed first. What’s more, building a minimum viable product (“MVP”) informed by this prioritization as soon as possible will generate rapid value to the customer. 

Finally, striving for ongoing, incremental product improvements urges insurers to change their perspective and think about an outcome, not an output. This process should continually evaluate customer value KPIs against expected outcomes and identify where further work remains to develop your products.

The technology

Instrumental to the delivery and the success of an insurer's product is, of course, the technology that powers it all. Here, insurers can use an external platform, build in-house solutions, or deploy a combination of the two, depending on their capabilities.

Regardless, digital solutions should be modular, scalable, and extensible. Firstly, a composable and cloud-enabled architecture will provide flexibility, scale, and resilience.  Secondly, using defined API and data strategies can align digital capabilities with business objectives. Finally, process automation, where possible, will also reduce manual effort and accelerate investment returns by building on each of these aspects.

A measured and considered technology strategy that considers all of the above will underpin any successful digital transformation.

The people

The final factor that must be considered to help insurers become digitally effective is their people.

Regardless of the industry, attracting team members with the right mentality, focus, skills, and experience is key to any company’s success. However, as previously highlighted, the insurance industry is not exempt from the clutches of the Great Resignation. Unfortunately, insurance firms wishing to retain and hire technically-minded staff are competing against major tech giants and disruptive startups.

Most tech startups are implementing flexible working environments and fully remote positions alongside eye-catching benefits for those who come to the office. Traditional insurance firms trying to hire will therefore have to offer similar opportunities to compete and appeal to this highly skilled demographic.

Looking beyond recruitment, another way insurance companies can retain their staff is by upskilling employees and unlocking their digital talents. Digital upskilling is often overlooked, yet it is considerably more cost-effective than onboarding new hires.

Besides the cost, upskilling also allows insurance companies to be more efficient, as employees will already have a working knowledge of the business’ pain points and operations. Insurers can even consider training existing team members on low-code solutions to widen the pool of digitally-skilled people and reduce demands on engineering teams.

The takeaway

All three factors of an insurer’s business (processes, technology, and people) are intertwined, with each factor being instrumental in the success of the other. As such, if an insurance company is looking to become more digitally effective and continue to grow in this fast-paced, ever-changing market, all three factors must be considered and addressed in unison.

Read the rest of the series:

  • Jason Paau
    Senior Director Program Management

Report
Innovation in Insurance Report

Our survey of 250 property and casualty policy holders aimed to cover not only what they expect from the claims process, but also key pain points, preferred communication channels and what they want insurers to do differently.

Get the report