Step by valuable step: the practical route to digital transformation in insurance

I once worked with an insurance company where everyone had a pad of sticky notes on their desk. When someone took a phone call, they’d mark it with a tick on their pad of sticky notes, along with some details of what the phone call was about.

At the end of the day, each person would peel off the note and stick it on their computer monitor. Somebody would then walk around the entire office, collecting all the sticky notes.

That was their management reporting.

To me, it’s a story that sums up the challenge our industry faces: a sector overly reliant on paper, encumbered by ageing technology, older processes and heavy regulation – all within a low interest rate environment that means making money is even harder.

On top of that, we have new, digitally-focused challengers entering the market – not just plucky start-ups, but tech giants like Google, Tesla and Amazon too.

A cause for optimism

It would be easy to feel dragged down by this, but I’m an optimist and passionate about this industry, its social relevance and the huge potential we have to deliver real change in people’s lives.

Why am I so positive? Well, firstly the solutions to all these challenges are out there already and I’m already seeing signs the industry is moving in the right direction, especially after the disruption of the pandemic.

The key thing for me is how carriers can practically transform to become the intuitive, agile and dynamic organization their customers need, while continuing to run the daily business? Here are three things for insurance carriers to keep front of mind:

1.    Relentless focus on the business outcomes

COVID-19 has accelerated the move to digital-first interactions and now the insurance industry has an opportunity to leap forwards in creating new customer experiences.

Even before the pandemic, the signs of this shift were growing increasingly positive. According to McKinsey, almost three quarters of the top 20 European insurers have built and scaled digital businesses in the last five years.

Now with COVID-19 this digital pivot has picked up pace and to succeed, the focus has to be on driving meaningful business outcomes. 

Identify and define a specific problem and tackle that with a design-thinking and build/test/learn/improve mindset to demonstrate value and impact quicker.  

For example, when Hurricane Florence struck the Carolinas in 2018, we were able to deploy hundreds of loss adjusters, all equipped with the latest tools in AI, analytics, virtual inspection, computer vision, and augmented reality.

They were able to assess thousands of claims spread across the hundreds of square miles affected by the hurricane. This freed up time for the carriers’ own loss adjusters and, the part that ultimately matters most to me, speed up settlements for those customers facing an extraordinarily stressful time in their lives.

Cases like this not only exemplify the social importance of insurance to help people when they need help the most, but also shows the potential of digital solutions to add new value - re-positioning digital as an enabler and predictor of new, better ways of working.

2.    Keep pace with change when it matters

Digital evolves at a rapid pace, as does our appreciation of how to use it and that means we need to re-assess its potential value to our industry regularly.

Take, for example, robotic process automation (RPA). The initial promise of RPA outstripped its real-world potential when it was first applied in the insurance industry. How many broken processes were simply automated, not fixed, and failed to drive value? Fingers were burned, and many of us languished in the familiar trough of disillusionment that inevitably follows a failed first implementation.

But advances in the technology since then – and, perhaps more importantly, our understanding of how best to use it – are cause for well-founded optimism amongst carriers.

Hyper-automation (“anything that can be automated in an organization should be automated,” says Gartner) now heralds new opportunities for carriers. But it’s not just the same RPA tech re-badged – it’s a richer suite of tools, process methods and standardization capabilities that demand we re-evaluate their role for the insurance market.

Crucially, adopting the relentless focus on business outcomes means you’re not pre-supposing its capabilities based on old information, but exploring them actively once you know exactly what – and how - they need to deliver.

3.    Planning beyond tech

The technology you choose is only as useful and effective as the processes it’s deployed to support. And the people working as part of that process can only do their job properly if they have the right skills and knowledge.

You can’t just bring in a new process on a new technology and expect everything to run as you’d expect.

This is why it’s essential to take a holistic view of what’s required to achieve the shift the old way of doing things to the new.

We have to interrogate the processes underpinning the current approach and the data they are generating. We have to stress test them to ensure they are fit for purpose for the business model you need enable or support now. 

And we also need to plan for the soft impacts of change too: Where are the gaps in skills and knowledge? What do our people need to thrive in the new state? How can we deliver that? How ready is our organization to change and how can we ensure alignment and adoption?

Moving forwards

So, being deeply ingrained in the insurance industry, in the midst of a global pandemic with economic challenges unfolding around us, I still see a huge amount of opportunity for carriers to seize today as a time to change and leap into the future

With a focus on delivering business outcomes, a willingness to explore new ways of tackling problems, old and new and setting ourselves up to iterate and evolve propositions at pace, we can thrive.

For more insights on the trends that will shape the insurance industry by 2025, read Genpact’s Insurance in the Age of Instinct report.