This article was first published on July 8, 2020.
The rules to building a successful business are conceptually simple - identify customer needs, build solutions to meet needs, distribute - repeat. This cycle has started getting shorter as customer needs rapidly evolve and the pace of change is accelerated by digital solutions. Leaders have started to anticipate customer needs, rapidly build and launch solutions and continuously modify these solutions for the next set of needs. This has meant building a ‘customer first’ mentality, adopting ‘digital’ by using data analytics to drive actionable insights and building the supporting technology and operational foundations to quickly react to market and behavioural changes.
Somewhere along the way, life insurance companies failed to keep up with the above changes. For many, the need for and immediacy of change wasn’t as high as business performance for the sector seemed stable and the threat of competition was quite low. Few players that did think about innovating around customer problems were burdened by legacy systems, poor data and internal resistance to change. Large scale digital transformation programs have seen only incremental improvements over the past few years and at the heart of it we have an industry with very complex products, long underwriting times, cumbersome claims processes and disengaged customers.
The issues in the life insurance industry are deep rooted and can’t be simply solved by digitizing the easiest steps in the customer journey or plugging existing products into digital ecosystems.
Insurers need to relook at the very foundations of their business and digital transformation programs. We’ve identified key areas across the customer journey where having a customer first mentality, strong data analytics and flexible technology architecture can drive tangible results and listed actionable next steps, which could be used as a playbook to replicate across the business.
- Customer first mentality – Offer solutions, not products
- Reinvigorated data analytics capabilities – Start with underwriting
- Retooled and upgraded technology infrastructure - Digitize processes and prioritise customer moments that matter
In this paper, we deep dive into these areas with practical recommendations that get insurers to tangible and real outcomes.
How to start?
Life insurers have tried digital transformation programs before and apart from a few exceptions, many have failed to live up to their potential. The COVID-19 crisis has only accelerated the need for digitisation.
Transformation teams and digital offices shouldn’t create a grand plan to overhaul the foundation only to stall and make no meaningful change. The key steps to get started are prioritization, selecting the right team and executing with purpose.
- Prioritize – Any digital program needs to have a clearly articulated shareholder narrative. Investors are increasingly skeptical of the returns from management teams’ investments in large digital transformation initiatives. Carefully prioritizing and stress testing the path to value creation is critical. Focus on these interventions and more importantly stop expending precious resources on others
- Select the right team - Build complementary teams with internal and external members incorporating adequate out of sector perspectives. The proportion of senior talent from outside the life insurance sector is still staggeringly low in most companies
Ajit Rochlani and Bridget Barker also contributed to this report.