Michael Turcsanyi—CEO, Goose Digital
It’s all around us. Digital transformation in the insurance industry is roaring. Companies like Deloitte and The Milken Institute are tracking close to $15B of investment in over 1,500 InsurTech players. They also report that at least 48 insurance carriers have dedicated innovation departments. The promise of it all? A complete, straight-through digital world with AI chatbots that quote and bind for us, immediate zero touch policy issuance and excellent loss ratios for digitally driven customers. Basically – Insurance Autopilot. Ok, it might be time to take a step back.
WHAT IS DIGITAL TRANSFORMATION?
Major corporations and websites like Salesforce and Wikipedia define digital transformation as going beyond digitization, which mainly refers to going paperless. Leading experts define digital transformation as driving the next industrial revolution with a central focus on creating a better customer experience. Obviously not a simple task in a market that doesn’t yet have complete underpinning digital connectivity.
DOES DIGITAL TRANSFORMATION AFFECT MY BUSINESS?
The short answer is yes. In fact, a recent UK study of 450 digital transformation leaders said that 89% felt their businesses were being digitally disrupted. I challenge CEOs (and Board of Directors) to look past short-term growth and examine how well they’re doing from a customer experience across lead, quote, bind, claims and renewals.
IT’S A JOURNEY
Even before the perfect, 2-way digital insurance fabric that we all wish for, companies can start their digital transformation journey. In fact, having talked with over 250 insurance organizations in Canada, I can tell you most already have. Here are 6 areas to be considered annually when evaluating your digital transformation plan.
Team
First and foremost, a successful digital transformation starts with the CEO. It is a top-down initiative that will only get the priority, importance and permeation across the business if it starts at the top. Then consider the team you’ll need to help build and execute your digital strategy.
Tolerance
This refers to the significant risk that exists for some traditional businesses about to embark on a digital transformation. You’ll need to evaluate the risk associated with the proposed strategy, tactics and timeline along with the risk associated with not moving forward. Use this analysis to create your tactical plan and a timeline that mitigates as much risk as possible.
Timeline
How long should a digital transformation take? It’s not for the faint of heart, and transformation experts at McKinsey agree it’s a marathon not a sprint. I often ask clients how long it took to build the business they have today. The answer usually helps them understand that transformation doesn’t happen overnight.
Technology
Digital transformation isn’t an IT problem, it’s a business problem. This is almost always confused at the Executive/Board level. Business leaders are pointing to IT to solve what’s arguably the largest business problem faced by businesses today. Having said that, traditional IT departments will need to move faster than ever before.
Testing
The worst thing you can do is a Big Bang. Your team should be using minimum viable products (MVP) and agile methodologies that allow you to come out with strong tests for products, services and marketing concepts. Your digital team should run multiple experiments to test customer adoption. If something isn’t working, kill it fast and iterate. Don’t be discouraged if something doesn’t work—this is a good thing because it means you can get closer to the answer.
Tracking
How do you know you’re getting there? It’s important to track each tactic and identify leading indicators of success within. That is, KPIs that show you’re moving in the right direction, but ultimately may not be the end game metrics you needed to sustain the program such as revenue, gross margin, EBITDA and ROI.
Digital transformation affects everyone in the insurance industry and unfortunately some businesses won’t make the cut. Those who will survive will take a strategic, top-down approach to reinventing themselves. They’ll put everything on the table, ask the tough questions and make the tough decisions to ensure they’re meeting the evolving needs of the customer.