While the insurance market remains robust and resilient during the covid volatility, increasing commercial pressures and market driven activity such as business interruption claims are putting pressure on margins. Regulatory obligations, Solvency 2 and stress testing oblige insurers to improve data, controls, reporting and business transparency. This is a familiar refrain for financial markets COOs and CIOs.
There remains a major task at hand for insurance sector C-suite as a legacy underinvestment in digital has been detrimental to insurance. New technology brings agile working, flexibility to deliver new product, improves STP and lower costs, while better client experience delivers higher retention and new business. The range of opportunities to benefit the business is wide and in conflict with budgetary limitations. The CIO and COO business case will be critical to prioritise digitisation in the sector.
The range of digitisation opportunities needs to be narrowed down to the most beneficial process changes and the optimally efficient automation initiatives. There is competition for budget and investment across underwriting, distributing risks and managing claims across wholesale and retail business. Key factors in the journey to automation and improved digital STP include opportunities for standardisation of data and process across bordereaux processes and end to end retail risk lifecycle.
There are major trends competing for investment budget including the following:
- Increasing investment in InsureTech (est $3bn in 2018)
- Increasing data sources require ‘big data’ techniques
- Emerging trends in competition are triggering investment in the client experience.
For the CIO and COO a response is to consider starting with customer centricity and the complete customer experience – where traditionally interaction with an insurer is an annual event, playing a role for the customer that increases perceived value could move client engagement to real time.
Many insurance processes are still manual and paper based, dependent on completing forms and .pdfs. Some steps to digitise the paper process have increased efficiency but there are continuing widespread incidents of errors and poor data quality which can only be improved when a full digital client journey is enabled.
Emerging digital client journey platforms and visualisation techniques are enabling better client service, a more personal experience and personalised products and pricing. In return facilitating a change in service models triggering a target operating model review driving resources and staff efficiency.
Call centre capacity has seen capacity challenges during the covid crisis as more clients have had to adapt to digital remote working. Improved efficiency and a better client experience is a double win for agile disruptors and provides a model for incumbents to emulate
Distribution channels such as Agents and Brokers are coming under pressure from emerging competitors, increasing standardisation of processes and a reduction in ability for personal interaction (esp during lockdown).
Insurers are increasingly looking to an ‘omni channel’ experience, the level of digitisation will vary according to complexity and value. As we have seen in banking and wealth management, enabling a high touch personal experience in a developing low touch digital world will bring competitive advantage including speed, convenience and personalisation for the client.
The changing demographics of the client base, also mirrored across the financial sector, is bringing increased appetite for digital interaction, wide ranging experience of the ‘customer journey’ in other sectors and an understanding and expectation of a quality digital interaction. Insurers are turning to emerging Fintech solutions to enable this approach.
Any new technology or process must integrate with the legacy platforms and business operating model – the focus is on value creation through digitisation enabling new customer centric high value products processed and administered at a lower cost.
CIOs and COOs at insurers need a clear strategy and roadmap to stay competitive in a digital world. The strategy must be dynamic and adapt to change over time as new trends and technologies evolve to meet changing market demand.
We recommend the following focus areas:
- Data analytics to better price risk and cross sell products to customers
- Digital portfolio of tools to enhance client experience, intimacy and reduce cost
- Data lineage and virtualisation to improve the quality and reduce the cost of compliance
- Cyber crime prevention tooling to protect customers and reduce cost
- Process reengineering – legacy processes need to be assessed and digitised, simplified and streamlined.
- Outsourced service provider review to confirm process and performance are fit for purpose
Incumbent IT departments are adapting to change, partners with expertise, especially those with adjacent financial sector experience can provide additional capacity such as TOM, assessment and review of solutions, resources to inform client perspective.
If you are interested to find out more about how we can help with your business transformation then email us at firstname.lastname@example.org. We are also hosting a webinar on 14th October where we will be discussing the above topic and more with a panel of senior executives. Click on the banner below for more information and to register your place.