Embracing Digital Customers in Analogue Insurance Businesses

Large swathes of the insurance and reinsurance sectors are still operating predominantly analogue businesses in 2013. Yet the greatest change and fastest growth area is their customers increasing competency with and willingness to make purchases through mobile platforms (smartphone, tablets etc.) Profitable growth demands that those businesses either charge more for assuming risk (difficult to do) or they dramatically improve productivity.

It takes more than a website and basic e-commerce if those firms want to be significant players in their respective markets. Achieving substantial and substantial growth in competitive mature and high growth markets necessitates a digital strategy that intelligently addresses the key customer touch points and their own business model. Many dumb consultants and internal IT experts suggest prioritising the “points of pain”. That is a stupid strategy. Let’s keep it simple,

Focus on six fundamental parts of the business: Corporate Operations and Governance, Underwriting and Products, Actuarial and Risk Management, Claims & Policy Management, Disputes Resolution & Litigation and Sales & Distribution.

Aside from the obvious return on investment decisions, demand each department head with profit and loss responsibility answers four questions:

– Distinguish Priorities: Where is the “seriousness” (high/moderate/low impact on the customer experience), “urgency” and “growth” (escalating/stable/insignificant) for digital investment in each function?

– Measure Progress and Success: What would tell us that we are making progress or have arrived at our goal?

– Demand Accountability: Who must be accountable (internal and external) for the progress and success?

– Remove obstacles and procrastination: What, if anything, stops us starting tomorrow to rapidly transform our business into a strong, dynamic digital competitor?

My observation with countless recent discussions with insurance and reinsurance executives is the cancerous fear of ending up in huge digital transformation projects that never reach their destination and result in an abundance of abandoned or mothballed projects. That fear is fundamentally about a loss of power and control. Control in the form of delegating responsibility to technical experts, who lose sight of the commercial imperatives. Power in the sense of being associated with a failed project and anger from shareholders, customers and other key constituents. Ask the right questions, demand transparent answers and that “journey” to the digital world can be hugely profitable. After all, what is the point of leadership if you are not comfortable using that power and applying the appropriate level of control.

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