InsurTech accelerating operational excellence
Editorial by Rick Huckstep
I love this quote from Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all”.
The point Drucker makes is that efficiency on its own is not enough, you also need to be effective. Reducing the amount of paper shuffling may improve operational efficiency, but if the shuffling of paper doesn’t get you closer to achieving your goals, then reducing it is a waste of time.
In the context of the post-Drucker digital economy, being operationally effective is every bit as relevant as being operationally efficient.
I’ve no doubt that Blockbusters were very efficient in the supply and distribution of DVDs. But they didn’t keep up with changing customer expectations on how they wanted to watch movies. Analogue insurers beware!
Which is the point made by Francis Templing and Mark Wylie in this month’s article from KPMG. In the digital economy, the use of technology provides the way for insurers to address both efficiency (in the operation) and effectiveness (meeting customer expectations).
Whether that is dealing with the back office operations, managing changes in demand or effectively handling low value claims. Or, in the front office and effectively handling customer service – tech has a role to play.
Dealing with the technology legacy and siloed organisational structures are big barriers for insurers to overcome. Simply creating an app as digital lipstick on an analogue pig isn’t the answer that it was a decade ago.
If insurers aspire to Amazonesque customer experience, then they need to be as digitally effective as they are operationally efficient. For which, by the way, the bar is now set at 20% GWP thanks to Lemonade.
As I said when Lemonade launched in Sept 2016; insurance will never be the same again! I believed it then and I believe it even more so now.
Just look at the latest innovation from Lemonade as they continue to challenge the industry. Policy 2.0 is the rewrite, redesign and rethink of the standard policy document. No jargon, no gotchas, no ambiguity. Simple, transparent, Amazonesque.
InsurTechs are already following Lemonade’s lead when it comes to setting the bar for cost of operations at 20%. And the incumbents need to respond; although turning the oil tanker to keep ahead of the approaching speedboats isn’t so easy!
Which is why I look at how insurers can learn from InsurTech in my article in this month’s InsurTech Insights. I list five different technology areas that insurers can observe from the InsurTech players to drive their own operational efficiency agenda.
Digital transformation is much more than just a technology play. But you have to start somewhere, and we hope this helps you on your way!
InsurTechs focus on customers, markets, value proposition and making sales – so what can incumbents learn from this?
Insurance companies are facing a critical moment – one where it’s imperative that they future-proof themselves against the digital disrupters, both large and small.