Digital Implementation Approaches
Editorial by Hugh Terry
This month’s InsurTech Insights explores how existing insurers can tackle the challenges of transforming and upgrading for a more digital world.
Rick’s article is a forthright point of view – the legacy is simply too old and too embedded to be tackled incrementally. There is a big catch-up needed and the InsurTech ecosystem that has been created will be the vehicle to achieve that objective. Rick looks at some of the platforms that are being created to do this.
KPMG’s contribution from Will Pritchett articulates a two-speed approach that explicitly manages legacy whilst allowing for “leapfrog” technology.
My perspective is close to KPMG’s in that incumbent insurers have little choice but to build a two-speed digitization / transformation programme.
- The “mothership” program – that looks at the vital task of crunching costs and improving services to existing channels
- The “speedboat” program – including a mix of venturing, acquisitions, agile piloting, innovation centres, new business units and new brands to take advantage of new product and distribution opportunities
The need for insurers to get access to more data and get closer to customers is becoming clearer and we can expect to see more partnerships between insurers and brands who have digital connectivity with their customers. Indeed the sweet spot for rapid transformation would seem to be to a mix of accessing digital customers in a greenfield environment with an established brand that has experience of technology development.
The supporting material is, as usual, worth browsing with examples of digital transformation from around the world.
Insurance is over-weight and unhealthy. For too long, the insurance industry has accepted that it is ok for at least a third of customer’s money to be spent on admin, overheads, sales and marketing. Insurance CEOs have been announcing operational efficiency programmes for years and yet the percentage of premium left for the risk pool hasn’t really changed. Thank goodness for the InsurTech Digital Implementation strategy for insurers!
KPMG Perspective - Technology and the transformation of the insurer’s business model - By Will Pritchett
Today’s insurers are caught between conflicting pressures. The changing regulatory landscape, evolving customer needs, and the disruptive impacts of technology are clear challenges to current operating models, while new entrants to the marketplace compound pressures on market leaders. Insurer’s business models must evolve; however, legacy systems, processes and skill competencies present significant roadblocks to change.