Technology transformation projects have become ubiquitous. In the last three years, almost every discussion I have had with insurance leaders has been about a strategy to simplify their technology, an upcoming system implementation, or the announcement of a new partnership with an AI-enabled insurtech.
This new landscape means that non-technical insurance executives are required to be well-versed in the fundamentals of technology, and comfortable having robust conversations with their teams, boards and shareholders on this topic.
They are required to answer a range of questions, such as:
- How are we using technology to stay ahead of the competition?
- What are the emerging trends in technology and how are we taking advantage of them?
- How can we use AI in our business?
- What is our technology roadmap?
- What technology capabilities do we need to set us up for the decade ahead?
Focus on business benefits
Successful executives know that despite the range of current and future challenges facing organisations, effective use of technology will always be critical to maintaining competitive advantage. In fact, these executives know that the key to meeting most of these current and future challenges is the effective use of technology.
It is at once one of the challenges they face and the single most important solution.
Of course, technology in insurance has existed for decades — however, it’s not the set of operational tools it once was.
Technology transformation can no longer be considered an element of business evolution and growth, rather it is the driving force.
Insurance executives are therefore now expected to express their business strategy as delivered through a tightly integrated technology roadmap.
The executives that I have seen most successfully navigate this journey start with a focus on business benefits and the outcomes sought through technology (the “why” to their transformation), and from there build a roadmap (the “how”).
Understanding the opportunities
Before embarking on any transformation journey, it’s important to appreciate technology has a value above its core functionality.
Every insurance business needs a policy system, a claims system, data storage and ways to transmit and visualise data.
The real value of these systems becomes apparent when they can be used to automate manual tasks for an underwriter (enhancing efficiency), make fast pricing changes to support more accurate risk decisions (responding to inflation and bolstering profitability) or identify attractive market segments (creating growth opportunities).
Invariably, insurance businesses confront logistical challenges in managing transformation. These include integrating systems across the organisation, offloading unused software and eliminating dependence on legacy systems.
However, finding solutions to these challenges must be driven by desired outcomes — a set of defined business benefits.
For example, you may be seeking:
- automation of manual tasks, saving time, resources and reducing human error
- less time between ideation and product launch
- higher reported customer satisfaction.
More accurate decisions
- advanced analytics for precise underwriting, risk selection and pricing decisions
- intelligent, business-focused feedback
- better detection of data anomalies like claims fraud.
- the ability to keep up with changes in the operating environment
- high quality data to guide actions
- better productivity and margins.
A framework to guide decision-making
Once you have a clear lens through which to view technology (your “why”), it’s useful to have a practical guide for thinking about digital transformation (your “how”). A three-layer framework incorporating data, platform and AI is a helpful way to structure any transformation plan.
- Data transformation: gather, clean and organise data to make better decisions.
- Platform transformation: create a flexible and scalable technology infrastructure that can support innovation.
- AI transformation: use AI to automate tasks, improve decision-making and generate new insights.
Platform transformation is the core of technology transformation – it’s your engine room. This involves upgrading policy systems, adopting cloud-based solutions or implementing a microservices architecture.
One of the most important decisions in the platform transformation journey is the choice between a monolith or modular system.
A monolith system integrates policy, rating, claims and financials in one place, which — while attractive — may not meet nuanced needs, lacks customisation and relies on a single provider.
A modular approach allows for specialised functionality for niche requirements and supports organic integration of new or upgraded software, however, it demands more time for testing and integration, and leads to a reliance on multiple systems and providers.
Whichever architecture you choose, the platform must be built on a solid data foundation.
No matter how sophisticated your platform architecture, its value can only be realised when it is powered by good, clean, well-structured and complete data. Your data transformation is imperative to the success of your platform transformation.
Robust data and platform strategies then unlock the power of AI transformation. Complementary applications driven by AI can be deployed to enhance value, create a resilient and agile insurance solution, and open new avenues for growth and supercharge efficiencies.
Unlocking competitive advantage
I have seen technology transformation evolve from a consideration in an insurance executive’s strategy to its place today as the driving force. Being able to successfully plan and execute technology transformation starts with knowing where you want to end up.