A roadmap for transformation in insurance
A roadmap to success
“It is not the strongest or the most intelligent who will survive but those who can best manage change.”
It’s fair to say that change is hard, and for insurers looking to transform in the face of disruptive competitors, it’s even harder.
According to a recent KPMG report, 55% of insurers are behind their target in trying to change and improve operational efficiency.
One comment sums up the big obstacles facing change agents inside insurers: “[The] sheer number and complexity of obsolete legacy systems and processes combined with a lack of experience in improving IT processes and implementing newer technologies.“
It’s tempting to put off transformation because it’s too hard, but there are steps you can take to make it easier.
Many insurers have tried agile ways of working but not many have managed to convert it to the whole enterprise. Those that have are experiencing tremendous benefits:
One of the best motivators for change is to remember who you are servicing. If you treat agile as an internal process, it will move at the speed of molasses, but if you link it to the end user, it can be a catalyst that accelerates the change process.
Make insurance transformation all about the customer
Leaders who can embed agile principles of autonomy, collaboration, speed and results in their company will get you about 80% of the benefit.
As one European executive put it, “Many companies are not connecting the change in customer expectations and digital with the necessity of changing the organisation. They treat agile on its own and not as an organic part of something strategic around customer expectations.”
Turning the focus onto the customer will drive you towards 100%, as well as boost talent recruitment from digital natives.
Speed up time to market
There is little point building a system over two years when the market changes every quarter – it will be obsolete by the time it is launched. The key is to be agile in approach and deliver change in smaller projects that are achievable, while constantly keeping the next set of changes relevant to the market. Consider these helpful time to market steps.
Integrate innovation into your business
A lot of companies keep their innovation or design hubs separate, yet involving them both will speed up time to market. You will get a stronger result when innovation is embraced holistically by cross-function teams.
Assign revenue goals to teams and projects
This will push teams to have a faster time to market.
Put outsourcing to your advantage
Reliable supporting partners can assist in rolling out innovations faster.
Develop pilot-ready customers or market segments
This helps to trial pilot programs with an acceptable risk level.
Create well-defined workflows
You want to do away with handoffs, cut down on time wastage and reduce down times.
Automate the development process
Get the right tools to approve the processes and generate reports crucial for effective management.
Develop ways to track results effectively
Collecting and sharing information in real-time allows innovation teams to gain agility and make decisions more effectively.
Secure a quick advantage with pilot programs
Trying to change the course of a large insurer can be like trying to turn the Queen Mary. Running pilot programs can be a useful way to tackle change in bite-sized pieces.
You need to identify a narrow audience you’re targeting with the pilot, as a limited size will make it easier to test. Ensure you have everyone you need onboard – don’t forget to include representatives from across the business to prevent later resistance.
Management leadership and support is critical, as is feedback. Without accurate measurement of results, you won’t have the data to prove the case for wider implementation.
Try to identify areas that are high priority and easily scalable. Once pilot results are proven, they should be blended into the core business.
MetLife and LumenLab, MetLife Asia’s Singapore-based innovation centre, have led pilot programs leveraging blockchain technology with early success.
In another pilot program, KPMG assisted a global insurance client to automate a manual process that moved 50,000 HR tickets through its CRM system each year. Under the new process, an RPA bot accesses the tickets, extracts relevant information and passes the information to a machine learning module. This module predicts the required priorities and categories. The new automated process now handles 85% of annual HR ticket volume, routing tickets more quickly and accurately while freeing up the HR team for higher-value activities.
One of Axe Group’s clients had a rating web service running off their main production servers for financial planners needing premium calculations. With network delays this could be slow at times and also at times add a significant load to the production servers. The client wanted an inexpensive solution with a low cost for each deployment, as several raters would be needed.
In only 3 days Axe built a working ‘rater-in-a-box’ that used the existing web service API so there was no rework needed by the agents’ planning software vendors. This ran in Docker so the Docker containers could be quickly deployed to multiple sites and run inside the planning software vendors infrastructure.
Get everyone on board
In the absence of certainty, employees become less willing to try new things. Most companies do not encourage creativity or reward employees for solving problems or taking risks, which compounds the difficulty. At the very least, you need a cross-functional team.
“If IT is trying to push this along, by themselves, it’s not going to work,” said Peter Logothetis, group chief information officer at Allstate. “It has to be the business model that starts out first. Our chairman…is on record saying that Allstate is no longer an insurance company. Allstate is a software company.”
Insurance industry leaders have to communicate that internal power struggles will not be tolerated. Digital transformation journeys can only succeed when individuals from multiple areas of the organisation step outside their comfort zones and work across boundaries for the good of the entire enterprise.
Low-code, modular, configurable software is the way forward
Solutions where relying on extensive coding and not configuration are not the way to operationalise change.
They are inflexible – the opposite of the agile approach. They take a long time to develop and test. By the time they are ready for release, the marketplace has likely moved on. And when you want to change the software, you need teams of coders who will likely create more problems than they fix.
By contrast, configurable solutions allow you to change how the system behaves by simply setting rules, parameters or variables, rather than having to modify the code base. Changes can be tested immediately, and the need for system-wide regression tests are limited because the impact of the changes are contained. Better still, your business experts will often be able to directly configure your systems.
Partner with an insurtech
Going it alone is tough. If you are trying to make change happen in your company, it can help to bring in expert change agents.
A recent Deloitte report suggested, “More insurers might consider accelerating product development by backing InsurTechs offering new, more relevant coverages, capabilities, and platforms, unburdened by the usual policy categories or annual commitments.”
And Joe Tocco, AXA XL’s Chief Executive for North America Insurance, has said, “In partnering with InsureTech firms, we are learning how new technology can help us in underwriting risks but also help our clients find the best way to optimise new technologies in their operations…”