KEY TAKEAWAYS:
--Rather than implement new projects in isolation, insurers should envision and build an overarching strategic plan for digital transformation across the enterprise.
--Digital transformation requires that legacy systems be retired and policies consolidated onto modern solutions.
--Companies must take a holistic view of the entire insurance value chain, prioritizing data as a central component of transformation efforts and investing in its management, quality and effective use.
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Most life insurers are mid-journey when it comes to total organizational digital transformation. While initiatives have been underway for the better part of the past decade, completed project segments are rife with misalignment, unmet expectations and dissatisfaction with the outcome. Insurers are finding that realizing the maximum value from these initiatives is harder than it seems.
In many cases, these projects were touted as low-hanging fruit, designed to be implemented quickly and to deliver value in the short term. Unfortunately, this approach often falls short because the initiatives were not conceived and planned with an enterprise view in mind.
To realize the planned-for value of all digital transformation projects, insurers need to adopt three bedrock principles.
See also: Revolutionizing Life Insurance Uptake in Younger Markets
Principle #1: Begin taking a holistic approach to digital transformation
Projects that have been executed in silos and are not inclusive of the entire organization tend to run into more challenges in quality assurance cycles, resulting in delays, overruns and fewer results. Thus, they don’t produce the expected value.
Rather than implement new projects in isolation, insurers should envision and build an overarching strategic plan for digital transformation across the enterprise. The plan would include solutions for major pain points from all stakeholders. It would consider core systems, digital sales, service solutions and adviser and distributor solutions.
It’s critical for executives to engage all stakeholders and ensure everybody communicates their unique needs and understands how they contribute to the plan’s success. One sometimes unintended, but positive, outcome of this exercise is a strong sense of the organizational benefit and cross-over benefits that each phase of the transformation brings to the company.
The key to organizational buy-in? Starting with a well-conceived and well-communicated plan. Within that overall plan, the enterprise can prioritize coming projects and allocate resources accordingly with energized teams ready to lay the foundation for success.
Principle #2: Reduce reliance on and complexity of legacy systems
Over time, most insurers build increasingly complex policy administration environments. These legacy ecosystems — the result of new product initiatives or M&A activity — create a disconnected landscape of data islands unable to communicate with each other.
With these isolated pockets of data, it’s difficult to provide customers with the same type of smooth digital experiences they enjoy in most other industries. Yet many insurers kick the modernization can down the road year after year, or paper over the cracks with patches and upgrades.
Every year modernization is delayed, the gap grows bigger between the fully digital and mainly manual. It also becomes harder to get the most from any new digital initiative when it’s delivered into an IT environment where connections are difficult, interactions don’t happen in real time and most data is inaccessible.
Digital transformation requires that legacy systems be retired and policies consolidated onto modern solutions.
Principle #3: Focus on data as the foundation for digital transformation by addressing data quality and efficacy challenges
Rather than focusing on isolated digital initiatives, insurers must take a holistic view of the entire insurance value chain. As part of this panoramic view, it’s important to prioritize data as a central component of your transformation efforts and invest in its management, quality and effective use.
Historically, the insurance industry has treated data as a byproduct rather than a strategic asset. For the sake of efficiency in applications, insurance made many decisions that were “data minimalistic.” If you enter only what you need, you can move the application or process along quicker. But this mindset creates challenges when attempting to make better risk decisions.
For example, many organizations are having to rework their data strategies when implementing artificial intelligence (AI) and machine learning (ML) initiatives because the outputs from those applications are only as good as the data being fed into them.
Insurance companies must find ways to bridge the gap between their siloed legacy systems and the broader digital ecosystem, ensuring seamless integration and alignment of data assets.
When an organization implements foundational data principles like adopting robust data management practices, retiring old core systems, connecting systems with application programming interfaces (APIs) and using new, event-driven interaction techniques, they are poised to leverage new digital solutions. These solutions are much better-positioned to provide maximum value and are implemented leveraging new tech and old data that is effective and operationally meaningful.
Creating this level of comprehensive data framework benefits all digital transformation initiatives. It increases the value generated by each one by producing actionable insights, optimizing processes, enhancing customer experiences and accelerating the development of innovative products and services.
See also: Genomics Revolution in Life Insurance
Wrap up
When digital transformation projects are approached as isolated events, they are far less effective than when they are conceived and executed as part of an overarching transformation plan. Maximizing the value of each initiative requires a strategic approach that recognizes the importance of building a foundation for all future development and growth by modernizing core systems and focusing on data.
Successful organizations understand that digital transformation isn’t just about implementing technology, but gaining organizational buy-in, emphasizing the importance of reducing complexity and reaping the benefits of quality data to better align with transformative efforts. These companies are on a holistic digital journey that empowers them to make informed decisions, drive innovation and deliver superior customer experiences.
