Article Synopsis :
When it comes to sustaining strong performance, certain digital capabilities and practices matter more than others.
The McKinsey report “The Hallmarks of Digital Leadership in P&C”, identifies best practices that lead to outperformance in the P&C sector. The report focuses not only on what’s working well, but also what isn’t working. The findings reveal insurers shouldn’t just make investments in technology for the sake of it, but focus on the practices most correlated with strong financial and customer performance and ultimately build the digital DNA of the organization.
So what are some P&C organizations doing right? McKinsey’s research reveals the following best practices:
- Strategy: Leaders chart a bold, long-term vision based on clear and shared articulation of customer priorities. They build strong leadership consensus around the vision and set robust growth targets. Lastly, they center the strategy around digitally enabled customer journeys. The strategies built are continuously rebuilt and realigned to changing needs and demands. They always focus on long-term vision and goals, articulating how they can use digital technology to attack, defend and partner in the near-term and in future.
- Capabilities: Leaders are particularly strong in areas like marketing, automation, channel connectivity and digital content creation. But the industry still lags in the three areas most correlated with strong financial performance, namely data driven decision-making, flexible technology infrastructure, and digitizing the customer experience. As insurer’s digital capabilities mature, they should push for digitizing the customer experience, perform data-driven decision making and adapt by opting for an agile technology infrastructure for faster turnaround times.
- Culture: Insurers are falling behind when it comes to creating the right cultural diversity. It’s necessary to build the culturally diverse business model to help foster innovation and bring new perspectives into the industry.
- Organization: To play the digital game insurers must adapt and change the way they recruit, develop and retain talent. They need to build a model propagating agile teaming, ultimately offering cross-team collaboration and learning.
The report suggests two ways insurers can up their digital game:
- Digitize in the near term: McKinsey estimates 30-40% of expenses are locked up in the top 20 to 30 core processes of any P&C and Life insurance company. Digitizing can help unlock this and improve operating margins through automation, integration and straight-through processing. In parallel, insurers should realign and rebuild key stages in the customer journey.
- Innovate in the long term: Build agile test-and-learn cultures and empower the front lines. Rethink product propositions and take on technological investments to make customer journeys simpler and more effective.
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Digital Insurer's CommentsThis report confirms that P&C (nonlife) carriers generating the strongest financial results do a handful of things especially well. They articulate an ambitious digital strategy. They use analytics and automation to enable more responsive and accurate decision-making. They instill a culture that obsesses over customer needs, and they build collaborative and agile organizations capable of continual innovation.
Are you outperforming your peers? Are you creating customer value through the innovative use of digital tools and tech – or just leaving it to the IT department to decide? Digital success is a function of digital leadership. This paper is an excellent primer for executives hungering to up their digital IQ.
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