Digital Transformation in the Insurance Industry

Digital Transformation in the Insurance Industry

Digital transformation in the insurance industry is about to take off.

In the coming years, digital disruption is set to change the way:

  • Customers choose and purchase insurance
  • Customers interact with insurance agencies
  • Companies operate and do business

According to research by Accenture, insurance companies are prepared for the digital age.

Digital Transformation in the Insurance Industry: Emerging Trends

In their 2019 survey, they found that:

  • 90% of insurance respondents said that, within 5 years, customers would be buying most of their insurance through online and mobile apps
  • 80% of companies expected virtual assistants to handle nearly half of customer interactions
  • 83% expect blockchain to be the prominent ledger system for business-to-business transactions within 5 years
  • More than 60% say that technology is already having a significant impact on their claims and underwriting processes

These highlights demonstrate that technology is already beginning to impact the insurance industry from top to bottom.

And that by the mid-2020s, we can expect to see the insurance industry change even more dramatically.

Insurance and Innovation

Another point of focus in the Accenture report was innovation.

And for good reason – innovation catalyzes disruption, transformation, and evolution.

The report found that insurance companies recognize this need:

  • 87% have a dedicated in-house team for digital innovation
  • 87% have a systematic approach to evaluating emerging technology
  • 83% apply consistent metrics to monitor the value of their technology investments
  • 90% have a long-term, coherent plan for technology innovation

This data demonstrates that insurance companies approach digital transformation as a marathon – not a sprint.

Such a systematic, long-term perspective on digital transformation is crucial to success.

However, digital transformation is not without its obstacles.

Barriers to Digital Transformation in the Insurance Industry

Here are some of the biggest obstacles to digital transformation, according to the Accenture report:

  • Lack of systems integration or compatibility (47%)
  • Lack of collaboration with IT (47%)
  • Lack of change management expertise (43%)
  • Regulation and compliance changes (37%)
  • Lack of training resources or support (33%)

And almost 90% of respondents expect employee headcounts to shrink over the coming years.

This trend is almost certainly due to the encroaching impact of AI, automation, and related technologies.

To succeed at digital transformation, companies must develop systematic approaches to supporting employee success and overcoming barriers to progress.

Let’s look at a few of these now:

Strategies for Successful Transformation

To successfully adapt, survive, and thrive in the digital age, companies should do a few things:

  • Prioritize digital innovation, disruption, and transformation. Digital-first businesses have an edge in the marketplace. By prioritizing digital-first initiatives, they stand a better chance of exploiting new technology and thriving in the digital economy. 
  • Develop strategies for overcoming barriers to transformation. Barriers to change and digital transformation, such as lack of collaboration with IT or IT systems integration, must be dealt with up front. IT modernization should be a primary target for any digital transformation program.
  • Enlist change management experts. Change management expertise can come in a variety of forms – change management consultants, hiring in-house change practitioners, or training staff through certification programs.
  • Optimize the customer experience and improve the employee experience. Improving the customer experience will improve a variety of metrics, from acquisition costs to retention rates. And keeping employees happy will increase employee productivity, engagement, and loyalty.
  • Maximize employee productivity and retention through effective employee training. On the one hand, employee training is necessary to enabling transformation efforts. On the other, it helps improve employee longevity, by helping employees thrive in the age of digital disruption.

Setting goals such as these is an important part of any digital transformation strategy. This is a necessary first step for creating an actual roadmap for change.

Creating an Action Plan

A roadmap, or action plan, will give business leaders something to discuss and evaluate – a concrete scenario that can be invested in, executed, and monitored.

Accenture recommends focusing on points such as these:

  • Evaluate your workforce. How does your current talent base stack up against your future needs? 
  • Adjust the business model as necessary. Yesterday’s business models cannot survive in the digital era. 
  • Form the right partnerships. Not all partnerships are created equal – ensure that you work with the right network in order to stay ahead of the curve.
  • Ensure a seamless integration between the old and the new. Transitioning between old systems and new systems requires effective change management and close collaboration with IT functions.
  • Leverage IoT data. The Internet of Things (IoT) is critically important for insurance companies, since IoT can offer deep insight into policy and pricing, among other things.

These action items can serve as an excellent outline for any insurance company.

Engaging in digital transformation is no small task, of course … so these points should just serve as starter fuel.

When designing a roadmap, ensure that you collaborate with business leaders – such as CEOs and CIOs. And work closely with all relevant department heads, such as HR and any other impacted areas.

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