Driving a Transformation Agenda in Insurance: Agile, Digital and Customer Centric

How can the financial services industry, especially insurance, catch up to the agile and flexible digital transformations seen in markets like retail?

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The Insurance industry is renowned for the challenges it faces in successfully driving a digital transformation agenda. The historical existence of systems and processes has created significant barriers in taking an agile approach to innovation.

Although it is a mature and well-developed industry, its success has become a transformation barrier.

Further, many insurers are still struggling with the old-fashioned assumption that digital transformation is simply ‘digitising’ a process. In fact, this type of thinking is creating the next wave of legacy issues in years to come. This is coming at a cost to competitiveness, as a recent report by PWC suggests that nearly 75% insurers believe that some, or parts of their business are at risk of disruption from the Fintech environment.

Identifying digital transformation as more than a single department’s role is the first step in kick-starting company-wide change and moving to the modern age. Transformation is happening in Australia, just recently the life insurance arm of NAB, MLC, announced a $300 million investment in digital transformation. However, the challenge of executing change is still a difficult one.

To explore this in greater detail, OmniChannel Media in partnership with Dynatrace hosted 16 of Sydney’s leading IT and technology executives across insurance to explore how insurers are really looking at digital transformation.

Sharing their insights on the content was Dynatrace’s Janne Halonen, Director of Finance Services Industry APAC and Marc Miller, General Manager of Group Strategy and Innovation from Medibank.

The open chat was robust, with several critical elements of the digital equation presented from a variety of perspectives. On ongoing strategic challenge, the luncheon highlighted the amount of efforts the industry is putting in to really understanding digital transformation.


Digital Transformation Shouldn’t Be Siloed

KPMG noted in its most recent “industry snapshot” report that eight out of ten emerging trends within the insurance industry are associated with digital in some way, shape of form. With the emergence of InsurTech, as well as new products coming to market in the areas of driverless vehicles and telematics, it was noted that the time was ripe for insurers to start conducting whole-of-business transformation efforts.

One of the key challenges in preventing the next steps of “digital transformation” change in insurance is the traditional structure of department separation that creates a completely siloed approach to each operation. Many organisations and insurers still think digital should “sit” somewhere.

However, to successfully initiate transformation in the modern era, digital needs to be integrated company-wide, alongside embracing a forward-thinking culture.

Halonen emphasised the importance of this by explaining that digital transformation shouldn’t be thought of as being driven by one specific department.

“Not a single department can cope on its own. It’s not like driving an IT-driven agenda, or a business department driven agenda. It needs to be the whole organisation,” he said.

Rebuilding structure and encouraging a collaborative environment across the insurance group has a key role in empowering each department to build an innovative and progressive ecosystem across the company.

It was noted that taking the first significant step in driving this change is breaking down these silos and empowering a digital-first culture. By doing this and maintaining relevance within a digital age, insurers can efficiently incorporate customer-centricity for their members.

Know Your Member: More Than Analytics

A key aspect of being able to maintain relevance in the digital age is embracing customer-centricity and providing a great claim and purchasing experience. To do this, you need to understand your customer’s needs, and how they want to interact with your brand.

This was identified as a key challenge, as one attendee noted that no-one in his team could succinctly articulate what their members actually need.

This revealed a significant flaw in the approach to their and promoted the executive to make his team question “what is the interaction that customers want?”.

Finding the answer to this would be crucial in successfully understanding their target market as well as being able to provide that a claim experience that members expect.

Leveraging insights from data was identified as a way of overcoming that challenge. Particularly when it comes to incorporating and utilising disruptive technology.

Miller added to this by explaining that driving a fresh initiative isn’t just about the technology, customer or internal operations, but it needs to benefit the entire company and be embraced at all levels.

“It’s not just technology, it’s how you drive the adoption. What’s in it for the customer? What’s in it for the provider? What’s in it for us?”

In saying this, it’s clear that executives are realising that data and analytics only provides a starting point and the need to utilise this information throughout the team is essential.

What to do Once the Member Trusts you?

Enhancing company culture and increasing engagement play a huge role in building trust and loyalty across your member or customer -base. This is something which is becoming an increasing challenge for key executives.

Trust from members can take years to build and maintain, but once this has been compromised, it is almost impossible to rebuild loyalty with your customers.

Three key elements in building and adding to this relationship includes regular communication, a reliable online presence, and providing security for their information.

Providing the right kind of experience and engagement is essential in creating and maintaining the trust between the insurer and individual. This can be achieved through multiple channels but needs to enable a seamless experience regardless of if it’s in person or through a digital channel.

Ensuring the right security measures are taken safely, storing sensitive information is increasingly difficult in a technology-based environment. However, this enhances the importance of members trusting insurers with their information, once that information is no longer considered safe it’s possible to lose a significant number of users.

The discussion flagged the importance of this with a member of the discussion explaining that “getting trust is a great thing but once you’ve got it, what you actually do with it is even harder.”

This emphasised the importance of security measures but maintaining and looking after the claims processing journey. Gaining the trust once is not enough, it needs to be constantly built and improved on through multiple points of interaction.

Conclusion

Unlike other reports on the insurance industry that tend to concentrate on the meteoric rise of technology and innovation in insurance, the luncheon placed a central focus on the change required from the “old” to the new. Showcasing the “reality” of the situation. Legacy can be an attractive thing, particularly when trust is a part of what you are selling, however it can also stifle innovation.

The discussions revealed that insurance executives are fast realising that digital transformation isn’t siloed between departments but needs to be embraced by the whole insurance group to successfully engage with the member or customer throughout their time in holding a policy.

Furthermore, it’s essential to not become complacent once the business has achieved that loyalty and trust and instead to continue on in manufacturing a product that the customer will be happy with.

Members are more than just numbers on a graph, they are emotionally-driven humans that need to be understood outside of the data and assisted through the insurance product cycle. Technology can only go so far, but it’s about implementing a culture of change externally as much as internally.