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Why Digital Inside and Out is the New Insurance Imperative

Appian Contributor
July 18, 2018

The insurance industry has always been slow to adopt new digital technologies and processes, and until recently, most insurers have been able to change slowly and still remain competitive.

That is no longer true.

Of course, insurers have extended some measure of digital capability through portals, but there is a growing realization that this is like digital lipstick,' and fails to address the need to integrate digital capabilities with the core of the business. Now with the current pace of change and the realization that technology and business models will continue to evolve and challenge the status quo, insurers understand that unless they achieve advantage through digital - inside and out - they risk becoming irrelevant in the market.

The Challenge of Effective Change

For most companies, the prospect of change is daunting. There is a lot of work involved, even before the project - or projects - can start, including setting priorities, choosing technologies, and determining budgets and timelines. All of this must be done while keeping the business running, which can be a daunting prospect for CEOs. A recent Forbes article, Four Ways The Right Leadership Drives Digital Transformation, illustrates the important role that executive leadership plays in driving a company forward.

A big takeaway from that article is that companies need to adopt new technologies that truly support their vision and values. But that still leaves some very practical questions for leadership to deal with.

What do you change? Where do you start?

Digital on the Outside

Insurers most often think of changing on the outside; using digital for portals and mobile apps - ways of improving the customer experience for users outside of their office - including insureds, agents and brokers. This can be a logical first step. Companies need to offer the highest level of customer service; to be there for the insurance moments of truth.

But in many cases, even if those external processes are improved, the result is mostly cosmetic. Like lipstick on a pig. "Digital lipstick," as McKinsey & Company noted in a recent FIVE FIFTY briefing.

Digitizing the outside is a start, but there is still more to be done.

Manual Work on the Inside

What about the work going on inside your company? Manual work, information on spreadsheets, in siloed point systems and done through email. Work that is a drag on productivity and prone to errors - negatively impacting the customer experience.

Even the best-looking user interface can't overcome slow or inaccurate responses. Think of the time lost to a mishandled claim, quote, billing question, or a simple address change. That time translates to customer attrition and lost revenue.

Keep your Core

There is one thing that doesn't have to change - your core system. The effort to rip and replace a core system is one that can be filed under the law of diminishing returns.

Fundamental insurance lifecycle transactions and functions are basically the same.

What has changed are distribution channels, the need to deploy and integrate emerging digital technologies, and customer experience expectations - and those will continue to evolve.

Go Bold or Go Home

McKinsey looked at the intensity of strategic response to digital, breaking it down into four categories - bold, semi-bold, medium, and weak - and they noted that only one out of six companies have created a bold response, even if nine out of 10 say they're engaged with digitization.

The bottom line is this: Digitizing your company's operations will ultimately help accelerate the customer journey and enable a better experience across sales, marketing, and support touchpoints, so you can be there for your insureds and agents when it counts the most.

The Moments of Truth

For an insurance company, the moments of truth are the ones that count the most. Those moments begin when a prospect visits your website or calls customer service to get a quote, and continue through the entire customer journey, including policy changes, billing inquiries, or when they need to report a claim. And the moments for your agents and brokers are equally important, since they will choose to place business with the company that is easiest to do business with.

Without a strong commitment to digitization, customer service - whether it is for an insured or an agent or a broker - will suffer.

Develop a New Mindset

Ultimately, companies that want to have a bold strategic response to digital need to rethink both the technology and the process. Business models will continue to change. There will be new entrants into the insurance market. And to keep up with that, the process of updating technology will be ongoing.

With the traditional development path, the thought was that a monolithic project would be undertaken and completed ñ there would be an endpoint, perhaps years out in time. After all, you had that discrete project plan and delivery date. But now, there is more to consider than the inevitable scope creep and evolving business needs. Companies must be agile and able to respond quickly in the new digital landscape and be prepared for technologies and business impacts that we haven't even heard of yet.

A low-code platform enables iterative change and allows companies to continuously innovate. It is the technology path that enables the bold strategic response to digital that insurers need - linking functional processes and applications to deploy digital capabilities across the business - inside and out.

Visit our Appian Insurance Resource center to learn more about our low-code digital platform.