As the world moves away from face-to-face interaction in light of the coronavirus pandemic, it’s time for the insurance sector to fully grasp previously ignored technological tools

The ongoing Covid-19 pandemic is a “wake-up call” for insurance firms to accelerate their digital transformation journeys, as coronavirus has irrevocably changed pre-existing business landscapes.

Tim Hardcastle, chief executive and co-founder of Instanda, said the ability to embrace new and existing technologies at this unprecedented juncture “will largely define the winners and the losers of the next era of the insurance industry”.

He continued: “It is now incumbent on the industry to rise to the digital challenge and ensure it is fit for the new digital normal that we are accelerating rapidly towards.

“For an industry that is all about preparing for unexpected events, many will have already found themselves caught off-guard as teams race to keep operations running remotely. The risk of doing nothing has become the greatest risk of all.

“In the new normal, digital transformation, where [return on investment] is delivered within weeks, will no longer be an option, but a necessity. The new normal is digital.

“This is a wakeup call; it’s time for the industry to get ahead of the game. It’s time for the entire industry to become digital pioneers.”

Kyle McNabb, senior vice president, product marketing at ASG Technologies, added that firms which fail to adapt could soon find themselves obsolete in the post-pandemic world.

“While many organisations have discussed digital transformation undertakings in the past few years, many industries – including insurance – viewed it as more of a ‘nice to have’ than a critical business tool,” he said.

“As the Covid-19 pandemic has shifted the way we work, these organisations no longer have this luxury. Insurers whose board and leadership were not actively vetting and investing in digital capabilities are playing catch up, with many recognising that if they do not invest in these solutions quickly, they will quickly become obsolete.”

The frustration for Hardcastle, however, is that the digital transformation shift to home working brought on by the current pandemic has not required an onslaught of new technologies – instead, it has simply highlighted that many insurers have just not embraced the modern technology being used as commonplace in other sectors.

He explained: “The tools that will help the insurance industry adapt to this new digital normal are already here and tried and tested, whether that is cloud-based [software as a service] platforms, mobile applications or through the use of [artificial intelligence]. Invention has once again preceded necessity, but adoption has been slow.”

Transformation tools

But, if insurers are looking to launch IT tools or processes to aid their digital transformation journey, Adrian Blidarus, founder and chief executive of Softelligence, said this comes down to four steps – collaboration tools, data and analytics, artificial intelligence (AI) and machine learning (ML), as well as chatbots.

Blidarus further believes that investing in automation and self-service capabilities are important for realising resourcing efficiencies.

He cited examples such as digital quote and bind and digital signature processes, online portals for brokers and end customers, plus chatbots that can bind elementary policies as measures insurers can introduce to achieve these transformation targets.

From an internal perspective, Blidarus added that insurance firms should encourage a data-driven organisational culture, drive business decisions using foundational data and initiative analysis, as well as embed data into processes for automated triggers.

Martin Mankabady, corporate partner at Dentons, agreed that digital transformation for insurers is more centred around reducing back office inefficiencies rather than the introduction of “radical new products”. He added that the emphasis of transformation will be on “delivering products in a different way”.

For McNabb, while “streamlining internal processes” is one element of digital transformation, he continued that “improving omnichannel customer experience” is also important.

He said: “It will be critical for insurers to provide a seamless, simple customer experience that focuses on improving communication, collaboration and automates human-centric activities. Key to this will be call centres.

“To ensure that service does not suffer, organisations must invest in digital tools that allow their agents to be more agile and responsive, including those that automate internal processes to allow these agents to focus on more complex tasks.”

A modern technological approach also means insurers waving goodbye to legacy software.

McNabb said: “Many insurers operate on legacy technologies, including mainframes. This has been a significant barrier for many to invest in digital – the sheer cost of shifting away from the mainframe was too much.

“However, given recent events, their hands have been forced – going digital is no longer an option and all firms must invest in a modernised environment. As such, moving off legacy policy applications and getting them into the cloud will be the first step that many organisations take.”

Hardcastle agreed: “Well-established companies are still reliant on monolithic legacy IT systems that weren’t fit for purpose during normal times, let alone this new normal that we find ourselves in.”

Human touch

Despite the laser-like focus on digital capabilities and technology since the Covid-19 pandemic hit, McNabb added that insurers “can’t just throw technology at a problem and expect everything to run smoothly”.

He continued: “Even in times like this when speed is critical, it’s even more important that firms take the time to clearly understand what their customers, partners and employees want and need from technology before acting.

“For many organisations, going digital is all about automating processes and limiting human interaction. But what we’re finding is that many people don’t want a fully automated experience – they like working with people.

“Smart organisations understand this and adjust their digital strategies to focus less on removing the human and more on empowering the human to be a value-based decision-maker. Only when insurers truly understand what all key parties want will they be able to successfully digitally transform.”


Were insurers on digital transformation journeys prior to Covid-19?

Adrian Blidarus, founder and chief executive of Softelligence, said that digital transformation in the insurance sector is not new, and has in fact been occurring since 2013.

He said: “Epidemics actually accelerate tendencies that were already there and things that were already happening.

“Digital transformation is not necessarily a new thing. It was happening since 2013, but due to the fact that people’s patterns of life have changed so dramatically, I think it’s going to be very difficult to go back to the old way of doing business.”

Martin Mankabady, corporate partner at Dentons, agreed: “This is going to accelerate embracing digital in a way that wouldn’t have happened as quickly if it had not been for Covid-19. The insurance market is really going to have to look at digital transformation programmes in a more serious way now.

“The insurance market moves slower than other [industries], it’s more conservative in that respect. They are hampered by legacy systems, but I think they’re going to have to break [in to] the digital world in a way they haven’t done previously.”

How can insurers implement digital transformation?

For Blidarus, implementation of a transformation project is a four-step process:

  • Proof of concept (fear zone): three weeks.
  • Pilot project (learning zone): three months.
  • Scale innovation (growth zone): six months.
  • Integrate innovation (action zone): ongoing.

He added that this method enables businesses to use pilot schemes to react and experiment, based on data, as well as integrate any new initiatives into current business processes. He further emphasised that successfully integrating new measures into a company’s operations requires a holistic approach.