Article Synopsis :
Digital transformation may represent a major focus for insurance executives, but the gap between those leading the charge and those following is huge.
It is accepted that those who lag behind their peers will soon be at a critical competitive disadvantage.
Almost everyone is doing something according to research from Cognizant, with 85% investing in digital and exploring a range of technologies including artificial intelligence (AI), big data, social media and cloud computing.
Higher revenue, increased efficiency and stronger customer relationships are the objectives, but all too often insurers adopt a piecemeal approach.
They launch initiatives with little coordination or insight into how the project will integrate with other parts of the business.
Few insurers have a comprehensive digital plan. This inhibits their ability to implement processes that allow them to change to business models that will drive increased revenue and profitability among other benefits.
Digital transformation needs a clear strategy and an understanding of the company’s “digital maturity”. Once this is understood, the business will be better able to position this strategy to achieve the competitive advantage these technologies will offer.
First, they have to measure digital maturity and Cognizant has developed a ‘digital maturity diagnostic (DMD) framework’.
This diagnostic tool examines five areas of digital maturity:
- Core business functions: how the organisation engages and enables the customer journey through its business processes.
- Strategic innovation: The identification and evaluation of new strategies as well as business and IT models designed to enhance the customer experience.
- Real-time insights: Building intelligence into platforms develops insights into customer interactions to enhance their experience and predict future customer needs.
- Human understanding: Knowing who the company serves both inside and outside the organisation in order to enhance customer, partner and employee collaboration across the ecosystem.
- Agile organisation: Moving away from siloed functions in IT and elsewhere, adopting new and innovative approaches to reduce costs and increase speed to market.
The DMD framework compares and analyses responses against a benchmark database as to a) how much it embraces digital and b) how capable it is of implementing it.
The framework offers insights into how far the insurer is away from achieving its digital objectives and how it measures up against its peers by awarding it the classification of digital dominator, doing digital or digital dabbler (currently represented among the respondents as 22%, 53% and 25% respectively). The company can also be retested in order to see how much any projects have managed to move the needle.
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Digital Insurer's CommentsIf you think you’ve already come across this already, then perhaps you saw this comparing banks with insurers recently.
It’s a similar approach, offering insurers an opportunity to have an impartial eye cast over their digital capabilities and then be benchmarked on how far they have come.
As some are quite a way behind the curve, this may provide some useful intelligence that will inform where the most remedial work needs to be done on the digital strategy.
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