Insurance CEOs are certainly saying all the right things about digital transformation. In a recent global survey of insurance CEOs, the vast majority (97 percent) say they see technological disruption as more of an opportunity than a threat. Almost three quarters (73 percent) say they are personally prepared to lead their organization through a radical transformation. And 42 percent say that, rather than waiting to be disrupted by competitors, their organizations are already actively disrupting their sectors.
However, my discussions with insurance CEOs suggest that many are not getting the traction they had hoped from their digital transformation investments. What I see is that companies are achieving some transformational success in pockets of their organization. But few have worked out how to digitize at scale.
What is stopping them? Most are struggling with a set of challenges we'll loosely term as `legacy issues': outdated and inflexible IT systems; redundant controls and processes; dated business models and strategies; and disengaged or disempowered workforces, for example. Creating the right environment and infrastructure to support the organization's transformation objectives will take time, investment and significant disruption.
But my experience working with leading insurers suggests that there are two other - less discussed, but equally damaging - challenges impeding insurers' digital transformation journey.
The first is a lack of clear focus and vision for the overall digital transformation journey. In a recent survey of insurance IT decision-makers conducted by Harvey Nash and KPMG International, just 28 percent said their organization has a clear digital business vision and strategy. The problem is that - without a clear enterprise-wide vision - the business is often unclear about what capabilities and investments they need to make and, as a result, resources are wasted and value is limited.
The second big challenge is more cultural in nature. The reality is that most insurance CEOs are espousing the right `tone from the top'. But when it comes down to executing the vision, many organizations are meeting significant resistance, particularly from middle management. Don't get me wrong: middle-management believes that transformation is needed and they are usually rather keen on the vision. But when it's time to really get moving, more and more resistance creeps in. A recent benchmarking survey by Innovation Leader and KPMG in the US found that a group of challenges dubbed “company politics, turf wars, or lack of alignment” was the #1 obstacle for building more innovation into an organization.
So how can insurers start to overcome these challenges and reinvigorate their transformation journey? My experience suggests there are a number of activities that insurers could be undertaking. For example:
To be clear - insurers are, for the most part, making great strides along their transformation journeys. But the market is changing rapidly around them. And customer expectations are increasing by the day. This is really an issue around pace, not desire, to make change.
Those that hope to emerge from their transformation journey ahead of the competition (and customer expectations) will need to move quickly to identify and overcome barriers to transformation. The market will not wait for those that are slow to catch up.