Three Practical Steps for Insurance Transformation

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Many parts of the insurance sector are lagging when it comes to digital transformation. While start-ups like Cuvva and DeadHappy are embracing innovative new approaches, bigger players find it hard to make material change. Yet according to The Insurance Heads of Digital, a report issued by Insider Intelligence, the industry is about to reach a digital tipping point. It says insurance technology spend in the US and UK will grow by more than 25% between 2022 and 2026. And it suggests insurers are likely to invest in digitising core capabilities, building digital self-servicing platforms, and creating personalised products and services.

What’s Needed to get Digital Transformation Right?

Digital transformation calls for widespread modernisation of the way things are done. It’s not a one-off project, but an entirely new way of thinking, working, and innovating. This can seem overwhelming to large and complex organisations. Part of the problem lies in technical debt – the accumulation of sub-optimal technical decisions made over the lifetime of an IT application. This concept is well understood, and while it takes time to resolve, it can be handled in a logical way. However, it often goes hand-in-hand with cultural issues and resistance to change, which can be far more difficult to untangle.

Nevertheless, insurers that take a pragmatic and empathetic approach can successfully turn their slow-moving monolith into an agile, adaptive business. In our experience, three core factors can facilitate modernisation. They enable long-established companies to carve out new approaches which enhance competitive differentiation and drive commercial advantage on an ongoing basis.

Insurance Transformation: Three Steps to Success

1. Maximise Cloud Capabilities

Digital transformation and cloud migration tend to go together for enterprise-level organisations. It’s true that cloud adoption plays a central role digital economy success. But it’s important to ensure stakeholders understand that the physical act of moving to the cloud isn’t transformational in itself.

The way infrastructure is recreated in the cloud has a bearing on an organisation’s future performance. Evidence points to the fact that practices such as infrastructure as code are linked to organisational growth, profitability, and increased market share. So, evolving or rewriting products and applications to fully exploit the capabilities afforded by the cloud environment reaps dividends.

Moving to the cloud is an opportunity to accelerate modernisation by improving how things are built and done. It’s not possible to improve everything at once. But you can prioritise applications that are likely to derive commercial benefits sooner, and ensure others are migrated in a way that facilitates future improvement when the time is right.

2. Embrace Modern Ways of Working

There is a pressing need for insurers to address new risks faced by customers and to meet evolving customer expectations. Everyone knows that innovation, agility, and adaptiveness are critical in the digital economy. But translating this into meaningful business practice can be a challenge.

Fundamentally it’s about generating highly relevant new products and features, then getting them into customers’ hands quickly. However, service reliability must not be compromised in the process, especially if you’re an established business with a hard-earned reputation to uphold. This is where DevOps practices come to the fore, offering ways to improve both organisational throughput (speed and frequency of software changes) and stability (change failure rate, time to restore service and availability).

DevOps is more than automation and technology. It’s about fostering a cohesive mindset across the organisation, which demands a cultural shift reaching beyond the realms of development and operations. Achieving continuous innovation without harming stability demands collaboration and a shared sense of ownership.

One highly effective way of achieving this is to switch from a project-led to a product-focused model where people are held accountable for long-term performance. This encourages operations staff to embrace experimentation (accepting that failure is a necessary part of the innovation process) and it ensures developers take more responsibility for operability (reliability becomes a central facet of new features).

3. Bring Your People on the Journey

The attitude and aptitude of people and the way they interact with each other plays a major part in the success or failure of digital transformation. So, putting measures in place to attract talented and experienced cloud professionals is an important consideration. However, it would be a mistake to overlook or write-off existing talent. Investing in ways to upskill, nurture, and empower teams can unleash exponential gains. Certifications from cloud providers can be an effective route, along with ongoing mentoring.

Many barriers to change are linked to cultural, not technical, factors. They’re often rooted in a lack of understanding or poor communication, further exacerbated by siloed working practices. It’s important to call these issues out and address them sensitively but tenaciously. In this way, you can achieve a one-team culture where people understand and care about the bigger picture.

Final Thoughts

There’s no escaping the fact that transformation is hard. But delaying tactics don’t make it any easier, they only serve to increase vulnerability to disruption in the meantime.

Action is needed to improve the relevance, resilience, and responsiveness of insurance providers. And it must happen quickly. The insurers dominating the agenda tomorrow will be those that embrace change today.

Find out more about how we can support cloud-led business change here.

With 20+ years in financial services and technology, Robert has worked on 3 continents helping customers effectively transform their businesses through adopting new technology, process, and strategy. Initially focused on institutional banking, recent years have had a bias towards insurance technology transformation, latterly as CRO at Ignatica a Hong Kong based insuretech looking to address the challenge of monolithic administration systems through microservices technologies.