It took a pandemic to force many insurers to speed up their digital agendas. Indeed, according to a recent global survey of Insurance CEOs conducted by KPMG International, COVID-19 has been the digital catalyst insurers so dearly needed.
The change has been nearly universal. Eighty-five percent of Insurance CEOs say COVID-19 has accelerated the digitization of their operations and the creation of next-generation operating models. Eight-in-ten (78 percent)say it has turbo-charged progress on the creation of a seamless digital customer experience. A similar number (79 percent) say it has brought new urgency to the creation of new business models and revenue streams.
Right across the insurance industry, we are seeing signs of massive and unprecedented progress. Some are exploring new technologies and partnering with Insurtechs and their existing technology partners to develop new models and tools. Others are accelerating their business impacts by executing quick minimum viable products (MVPs) and proof of concepts (POCs) and then straight into production. Many are looking for ways to simply speed up their existing digital roadmaps. And some are exploring new and different outsourcing solutions to drive agility.
Over the past few months, we have seen particular focus being placed on digitizing the contact centers and the claims functions (two areas most under stress since the start of the pandemic). We have also seen fantastic progress being made in the adoption of automation and process streamlining (especially around intelligent underwriting), improving the use of structured and unstructured data, external data and the exploratory use of knowledge graphs (an evolving field that helps identify correlated trends in data).
While this is all great news, there are growing signs that Insurance CEOs may be struggling to take the 'next step'. The CEOs in our survey admit their greatest challenge in driving forward their digital transformation is that they lack insight into future operational scenarios. They also say they are having difficulties making technology decisions quickly as they redefine their future state operating models.
The problem is that the world continues to evolve very rapidly. Customer needs and expectations are changing. They now expect their 'best digital experience' to be the norm, regardless of which industry provided that experience. And that means that insurers are no longer competing against other insurers, but rather against the wide range of digital experiences customers now enjoy in their lives.
Customer patience and loyalty has also worn thin. With lots of digital competition now in the market, customers have become increasingly willing to reconsider their insurance options. Having been forced to do all their other purchases online, customers have become increasingly comfortable with buying products (even complicated financial ones) virtually; new or more digitally savvy customers will naturally be drawn to those with the best digital offering.
What can insurance organisations and their CEOs be doing to keep up (or even super-charge) their digital momentum? My work with insurance CEOs suggests the leaders are doing the following five things:
There is one characteristic that unites all the leaders I speak to: a sense of genuine urgency. Insurance CEOs recognise they can't wait any longer. There is no doubt that many insurers are walking a fine line between balancing the need to invest and the concerns around costs. However, they all know that their customers are already moving on without them. And they will need to work hard just to catch up. In this fight for survival, pace matters.