Digitalization in Insurance Industry
Raising customer expectations & rapidly growing InsureTech start-ups are reshaping the Insurance Industry. Insurers need to leverage Cross-Industry Collaboration, Digitalization, Analytics, and Automation to stay competitive in the business.
For years, everyone was talking about “Digital” however per recent global survey (by HBR & McKinsey), adoption of the "Digitalization of business processes" is less than 15% in businesses.
Globally, Insurers are planning to improve their financial performance, improve customer satisfaction, stay competitive with better insurance products at reduced premium rates.
With emerging trends like Usage based Insurance, Digitalization is a must (and no longer an option), however the adoption of the “Digitalization of business processes” is low & very slow due to 2 key “Digitalization” myths that need to be busted. It will need a bit of courage for the decision makers to shatter these 2 myths:
- Myth 1: Implement cutting-edge technology to become Digital organization.
- Myth 2: Digital Transformation involves significant internal & external resource pools with significant investments.
Busting the Myth 1:
Technology is the quintessential factor and enabler for new business capabilities. However, focusing only on cutting-edge technology to start with is the biggest hurdle in Digital transformation. We think the way forward is “Co-Creation of Digital Excellence” by identifying the “Digital Purpose” first and then matching the correct technology to aptly meet the stated Digital Purpose. Governance, Proactive Risk Management are the key aspects of Execution.
Busting the Myth 2:
Swift Digital Transformation can be achieved with small & focused teams, with smart selection of technology partners. Thanks to advancements in Cloud platforms, CAPEX models have become obsolete and OPEX models are a reality for IT Infrastructure & IT Services. Such an approach leads to realizing the benefits within few weeks / few months. Small and niche IT service providers offer Business Transaction based pricing models with Zero CAPEX for IT Infrastructure & IT Services. A small restaurant has an owner who greets you by name and delivers personalized services for every occasion, with high quality & at affordable cost. However, a word of caution… Small is the new big only when the leaders running the small have proven track record to architect & deliver big in Insurance industry.
Digital Purpose is the Starting Point:
Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), Blockchain, Robotic Process Automation (RPA) – all these are important for Digitalization. However, Digitalization effort must start with “Digital Purpose” (and not with Technology selection). Identify the Business outcomes that need to be changed, like faster claims processing, fraud prevention etc. Next step is to identify the associated Business processes, key internal personnel, external Technology partners, and their role in digital journey. Very well defined “Digital Purpose” is the starting point leading to “Co-Creation” with harmonized efforts from both Business & Technology personnel.
Buy-in from all stakeholders for the stated "Digital Purpose":
can be simplified with a very simple CARE framework (Create, Avoid, Reduce and Enhance), to simply state what will “Digitalization” lead to:
- Which new Business Capabilities that do not exist today and can be Created by Digitalization?
- Which Costs / Manual or Redundant operations can be Avoided / Eliminated?
- Which Costs / Operational overheads / Manual tasks can be Reduced?
- Which existing Business Capabilities can be Enhanced?
Entire process must be Agile, avoiding the risk of prolonged analysis. Agility and Speed are the key and Change is the new normal.
Prasanna Miapuram & Vikas Abbi – authors are co-founders of SwiftAnt (with Global presence) and have worked in senior management positions in Big companies like IBM, Apple in large projects before taking the plunge to starting SwiftAnt, with the motivation of “Small is the new Big”.