Risk & opportunity in increasingly digital world – Tapestry Networks

Article Synopsis :

While digital transformation is happening slower in the insurance sector than in others, the changes, as they come, are no less profound. Where boards used to think about technology in terms of discrete new investments, there is a growing understanding that digitization is pervasive.

Digital transformation is board-level stuff

In the report “Risk and opportunity in an increasingly digital world”, the Insurance Governance Leadership Network (IGLN) discusses the implications of digital transformation at the board level.  Four main questions are considered:

• How should board directors define and think about digital transformation?
• How quickly are leading insurers embracing the digital world?
• How can traditional insurers redefine their offerings to remain relevant?
• What should boards do to lead organizations through digital transformation?

Key takeaways are as follows:

• Digitization is the intersection of new technologies, new capabilities, and changing customer behaviors. Digitization is not about technology, but making customers’ lives easier.  How do you make the transaction as frictionless as possible?
• Digitization is a force reshaping the entire economy, not just insurance.
• Digitization is a risk and an opportunity.
• To date, most of the digital investment within insurance has been to modernize systems to comply with regulation and reduce cost, or to digitize existing offerings.  There has been very little true innovation around products.
• Insurers must evolve from product providers to problem solvers. Today the focus is on digitizing traditional insurance, tomorrow is about finding different models.
• To become problem solvers, insurers must leverage core capabilities, find partners, and improve customer education.
• Offerings should leverage technology to deepen relationships. More touchpoints via mobile and web should translate to tighter bonds with customers.
• Insurers should use technology to access new customer segments. By removing cost and increasing access, technology can enable insurers to reach less wealthy market segments.
• Legacy architectures must be updated. 80% of insurers cite legacy technologies as the top hindrance to digital growth.
• Boards must get actively involved in digital transformation, ‘asking about technology more often than once a year.’ Security risks around digital are a main (and growing) concern.

Talent and culture are also discussed, chiefly the recruitment of new talent and the creation of environments in which such talent can experiment and fail toward innovation in key areas.

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