Insurance Leaders Need to Do These Three Things for Digital Transformation Success
The global pandemic has uprooted many industries from healthcare to travel to dining. Historically, the insurance industry is one that can survive change because it is a critical need for businesses and individuals. However, this fact alone is no longer enough to drive sustained growth for insurance companies, especially in the face of global events and competition from powerful incumbents and nimble newcomers. Digital transformation and the effective use of digital tools will help to make this centuries-old industry stronger in the post pandemic world.
The benefits of digital transformation for the insurance industry are multi-fold – it leads to improved customer experience by helping to streamline the customer journey, reduces cost through automation technology and also reduces risks and fraud. I have seen tremendous benefits first hand. At Whatfix, we have worked with many insurance businesses to help them in their digital adoption journey. For example, we worked with Sentry Insurance to provide training to over 2,000 associates and 75,000 customers, which resulted in a saving of $950,000+ over one year.
From my experience, most insurance industry leaders are committed to transforming their business and already have the right mindset in place to enable change. Some of the barriers that still stand in the way largely fall in two buckets – an organizational structure and people strategy that do not support change and an over reliance on legacy technology systems. For those still on their journey, I suggest the following three strategies to help them achieve digital transformation success.
Optimize Change Management Strategies
Digital transformation causes companies to “change the organization, talent model, policies, processes and procedures – basically, the entire service model or business model,” Peter Bendor-Samuel, CEO of Everest Group, notes. Leaders who fail to manage this change will struggle with digital transformation. It is no wonder that 42% of companies cite change management as an important factor in digital transformation. To reap the benefits of a digital overhaul, leaders must clearly communicate the degree of change and retire old processes. Merely implementing new technology is not enough.
Successful change management begins with getting leadership buy-in and support from the people most affected by change. Without buy-in and support, change initiatives often fail before they even start.
It is critical to establish change leaders early on to build internal support. Furthermore, leaders need to ensure that announcements and mandates for change are clearly communicated and that key performance indicators are set to measure starting points, crucial milestones and the desired result. Finally, remember to not ease up on change initiatives too soon. A lack of momentum is one of the biggest barriers to success, so it is crucial to keep enthusiasm high all throughout the transition.
Reinvent Training Processes for Employees
According to Everest Group, a lack of internal skills and talent is a major barrier to technology adoption among insurance companies. Also consider that there is a large skills gap when it comes to some of the most important technologies driving innovation in the insurance industry: artificial intelligence, cybersecurity and the internet of things. Furthermore, another survey found employees considered adequate tools and proper training as important job characteristics. When employers failed to provide adequate training, it made their job difficult and they were more likely to leave.
Given these realities, it is critical for insurance leaders to consider reskilling and upskilling initiatives as essential to their digital transformation strategy. Implementing digital adoption platforms is one way to ease the transition. Instead of overwhelming agents with mounds of documentation, consider interactive guides that provide contextual cues for policy agents. Microlearning paths can also be effective in breaking down digital platforms into components and sequential courses, such as claims, underwriting and billing so it doesn’t seem so overwhelming and daunting.
Let Go of Technologies That No Longer Serve You
We often see an over dependence on legacy systems in the insurance industry. In 2016, a CAST software study found 69% of insurance organizations in eight countries were run largely on COBOL applications. This is a decades-old technology that needs regular maintenance and is often deprioritized by developers in favor of new technologies. Another 2018 study confirmed legacy systems were still a barrier to digital transformation for insurance companies.
Traditionally, the insurance industry has not been quick to adopt new technologies, even though they provide the critical infrastructure to drive digital transformation forward. For example, smart devices in homes, cars and workspaces help insurance companies monitor customer activity and gauge risks. Analytics and artificial intelligence help insurers identify false claims. Automation allows customers to file claims when it is most convenient to them and frees up the time of support teams. According to McKinsey, automation can reduce claim costs by as much as 30%.
Needless to say, technology can either sink digital transformation or drive it forward. CIOs and CTOs of insurance organizations need to take a holistic view of their technology investment strategy. This means taking a hard look at legacy systems in place, getting rid of what no longer serves the business and making strategic investments in new technologies that will support the organization on its path to change.
Insurance industries are at a crossroads in the post pandemic world. While previously, digital transformation may have been a nice to have, it is now critical to organizational success. The expectations of modern insurance buyers are changing – they now expect hassle-free experiences, mobile-friendly options and above all, they are happy to shop for policies from new players. By doubling down on change management and employing a smart people and technology strategy, insurance companies can continue to innovate and stay competitive.
Khadim is the CEO of Whatfix. Prior to starting Whatfix, Khadim spent more than 10 years at Huawei Technologies leading the Business Intelligence unit.
Khadim holds a Master’s in Information Technology from IIIT Bangalore and Bachelor’s in Electrical Engineering from University of Bombay.
