17/01/2024, 13:55

Reshaping insurance’s IT roadmap for digitally savvy customers - Insurance Post

Reshaping insurance’s IT roadmap
for digitally savvy customers

Fiona Nicolson
17 Jan 2024

Indicative reading time: 6 minutes

Analysis: Fiona Nicolson examines what it takes to create atransformation roadmap for the insurance industry that will
deliver digital-first, real-time, personalised customer
experiences for policyholders.
Past, painfully expensive IT transformation projects have revealed
updating the insurance industry can be a laborious process.
The task continues into 2024 with insurers currently faced with thecombined forces of a challenging economy alongside a rapid evolution
towards digital-first, real-time products.
As they seek to deliver ever-more personalised experiences for their 21stcentury customers, insurers have much to consider, from a technologicalperspective.

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Data that is stored in multiple silos as a result of legacy
systems risks becoming outdated, incorrect andinconsistent.
Tom Lawrie-Fussey, senior director of product management for insurance at
LexisNexis Risk Solutions“Insurers need to leverage more flexible and agile technology, andharness data and analytics to provide customers with the seamless, digitaljourneys that they expect,” observes Natasha Davydova, chief information
officer at Axa UK&I: “This is also vital to ensure insurance products are
more personalised, preventative and sustainable.”It’s also important to take a holistic approach, emphasises Jason Howes,
director of transformation at Allianz Holdings: “To undergo a digitaltransformation, an organisation must look at all areas of the business.
“It’s not enough to do digital, you need to be digital. Implementation of
any technology needs to be considered from both a technological andfrom a people angle,” he adds.

Devil in the data
Behind the scenes, insurers are crunching the data, to be able to provide
the digital experience their customers are looking for.
However, the job of extracting and integrating disparate data sets andincorporating the intelligence from that data directly into workflows andproducts does not happen overnight.
“This is a real challenge for any business,” explains Mark McDonald,personal lines insurance director at Altus Consulting.
“Firstly, the business needs to have a clear understanding of the data
landscape. There must be a focused effort to identify all sources of data
used and then to evaluate the quality and reliability of the data, to ensure
its suitability for integration.”

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Reshaping insurance’s IT roadmap for digitally savvy customers - Insurance Post

“Next, businesses should invest in modern and robust data-integrationand management tools, allowing for seamless extraction and integrationof data from different sources, to create a single, unified view of the data.
“Once the data is integrated, there are a number of techniques that abusiness can apply toextract intelligence and meaning from the data, including analytics andartificial intelligence. These can then be used to identify new patterns andinsights, to derive the greatest value from the data.
“Finally, to ensure the ongoing success of a data transformation of thistype, businesses must implement robust data-governance practices andsecurity controls to ensure quality and consistency, while protecting
sensitive data.”
They also need to move quickly, according to Rory Yates, global strategy
lead at EIS.
Yates says: “Most insurers have some ability to integrate disparate datasets, but they struggle to make sense of them in a meaningful way, or act
on the insight at the speed necessary to derive value.
“The key issue is that their business and the technology architecture it sitson are built around the policy and not the customer. This creates
obstacles that block the segmentation, flow, and use of data. Data is aperishable asset. If you can’t leverage its value quickly, it’s lost forever.”Tom Lawrie-Fussey, senior director of product management for
insurance at LexisNexis Risk Solutions, also pinpoints some data
challenges, adding: “Data that is stored in multiple silos as a result oflegacy systems risks becoming outdated, incorrect and inconsistent. Thiscan lead to wasted marketing budgets, customer-service inefficiencies,and inaccurate pricing.”

Cost transformation, growth, or both?
Considering how to focus investment and prioritise between costtransformation and growth opportunities could potentially present
dilemmas.

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Reshaping insurance’s IT roadmap for digitally savvy customers - Insurance Post

However, Yates believes transformation and growth are not mutually
exclusive options: “They’re symbiotic, because modern technologies cando both, and create huge efficiencies and operational changes that makeexperiences better.
“You can no longer divorce cost from customer experience. That’s just abad business model. Skewing transformations towards one or the othercreates problems and missed opportunities.
“Transformation shouldn’t be driven by the value of the policy, but by thevalue of the customer,” he adds.
McDonald suggests taking a deep dive into the detail before making any
decisions: “It is key to consider the complete operating model before
deciding on where to prioritise investment.
“A clear view across technology, capabilities, data, process, andorganisation provides a robust starting point for an organisation to build
on, allowing visualisation of where an organisation’s costs are, the impact
of investment in each area and any indirect benefits or impacts of activity.
“This view can provide insight into which areas to focus investment andbalance growth with transformation across the business.”

Shifting mindset
It has taken considerable amounts of time, effort, skill, and budget, overmany years, to undertake the job of shifting the centuries-old insuranceindustry into the digital age.
Having done the groundwork, the industry is adjusting from majortransition to business-as-usual mode.
However, there is further progress to be made, as Macdonald says: “In
most organisations, the shift from a transformation-project mindset tocontinuous updates is happening.
“But a number of steps need to be taken by organisations, which, if notdone as a whole, will risk the overall transition,” he warns, adding: “Theseinclude the embedding of new methodologies and practices; shifting thehttps://www.postonline.co.uk/technology/7954750/reshaping-insurances-it-roadmap-for-digitally-savvy-customers

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culture to one of continuous learning and innovation; and providing
strong leadership commitment to this change.
“Building a scalable and flexible architecture, putting in place robust riskmanagement processes and embedding the right KPIs and measures willbe critical steps. Finally, establishing feedback mechanisms for customers
and staff will ensure that any updates are aligned with user needs.”

Emulating other sectorsAs products such as wearable technology and virtual-assistant technology
like Amazon home hubs become the norm, insurers could also change thebuying and claims experience for customers by building products that
adapt to customers’ needs and mitigate risks.
But Macdonald warns this might not be the right approach: “When you
start with a trending technology and believe you have to create value fromit, you’re starting from the wrong place.
“You should start with the right questions. How do we make ourselvesmore valuable to our customers? How do we make the claims experience
better? Then, how do we use data to drive valuable outcomes related toboth?”He adds: “The reality is, that should an insurer integrate these devices,
they’d probably use the data to assess the price to risk and leave the rest
dormant in a policy spreadsheet somewhere.”
André Symes, group chief executive at Genasys Technologies, alsoemphasises the importance of focusing on the customer when considering
how to make the most of emerging technology.
He says: “People engage with big tech companies on a regular basis andthese companies have raised the bar when it comes to what customers
expect.
“It’s time to be bold and ask: what do our customers really want and how
can we deliver that? This will provide a roadmap, guiding insurers todeliver a truly personalised customer service for their policyholders.”

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Chris Kitchener, vice-president for product management at Applied
Systems Europe, takes a similar view: “The key is not to be tech-focused,
but customer-focused.”

Hurdles towards a digital organisation

Average score ranked with five, lowest with one.

Source: Strategy& anaysis; PWC survey, 2021
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Embedded insurance
A Deloitte Insight paper, published in July, reported embedded insurance
is “poised for exponential growth.”
The firm predicts that if 20% of the US personal auto market focuses on
embedded insurance by 2030, “at least $50bn (£39.8bn) in premiums
could be diverted away from the industry’s traditional distribution
channels.”
But it won’t become the dominant form of distribution, says Yates:“Distribution will continue to expand and will remain multifaceted.
“However, I think embedded insurance is going to proliferate in lots ofhttps://www.postonline.co.uk/technology/7954750/reshaping-insurances-it-roadmap-for-digitally-savvy-customers

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Reshaping insurance’s IT roadmap for digitally savvy customers - Insurance Postways. We estimate that it’s a $3.7trn (£2.9trn) opportunity. A large chunkof that will be new value and a lot will be existing value but generated in adifferent way.
“It’ll be generated at the point of sale. We’re already seeing that working.
However, there’s the risk the consumer might not understand what
they’ve bought or find themselves doubling up on insurance they alreadyhave. We need to account for that. The regulator certainly will.”
René Schoenauer, director of EMEA product marketing at
Guidewire, observes for embedded insurance to become the dominant
form of distribution, insurers must show its value to customers.
Schoenauer says: “It becomes more useful when it aligns with customer
needs and pay-as-you-go models.
“Insurers need to be transparent with their customers and clearlycommunicate what the embedded offering includes.”At the moment, though, many customers don’t even know it exists. Duck
Creek Technologies’ 2023 Global Consumer Insurance Insights survey ofmore than 2000 policyholders, found that nearly half (46%) were
unaware of embedded insurance.
Of the 37% who said they were aware of it, half said they trust it becauseof retailer or product quality. Those who don’t trust it (26%), find it
unnecessary and expensive.
Regardless of whichever technology or channel insurers use, theimportance of ‘people skills’ should not be underestimated, as Tom
Burroughs, chief technical officer at Synergy Cloud, explains: “The key toeffective personalisation for policy holders means seeing them as
individuals with unique expectations.”
Equally important, Burroughs observes, is recognising the limits oftechnology.
He says: “No matter how advanced our tools may be, in certain claims
there’s a point where human insight and empathy are irreplaceable indelivering truly personalised experiences.”

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Reshaping insurance’s IT roadmap for digitally savvy customers - Insurance Post

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