Business insurance

CIO Perspective: Digital transformation in the insurance industry was the problem last year – three new challenges face our digital future

The well-mapped path of ‘digital transformation’ has been accelerated over the past two years in the insurance industry, with the challenges of the pandemic triggering a much-needed digital rush. The results are clear to see. A KMPG survey found that 85% of insurance CEOs believe Covid-19 has accelerated the digitization of their operations and the creation of next-generation operating models and now those digital priorities are set to change again in 2022. Steve Woodford, CIO of BGL Insurance, explores three new challenges facing the industry and explains why IT teams are poised to become the center of business growth.

Nearly four in five senior insurance executives say Covid-19 has spurred progress in creating a seamless digital customer experience and spurred the development of new business models and revenue streams. Those who have adapted quickly will now have stabilized their businesses for a strong market position for 2022 and beyond – particularly around key differentiators such as customer experience – while those who are battling ‘digital laggards’ will only collapse.

Now, with digital transformation in the rearview mirror, a new set of industry pressures facing organizations across the insurance ecosystem are looming over the next few years.

New pressures to come – make sure you’re in the driver’s seat

Business change is a constant, continually driven by factors such as industry trends, customer expectations and regulatory pressures. Business leaders cannot afford to stand still.

Here are three critical points insurers face in order to stay competitive and mitigate threats before they affect day-to-day operations:

1. Increase customer expectations

Going forward, InsurTech’s insurers and suppliers must recalibrate their technology products, services and offerings to meet the growing expectations of an increasingly demanding clientele. Policyholders and potential customers expect more convenience, a wider range of services and constant communication, all available through the channels of their choice.

Deloitte confirms this. Following a comprehensive audit of changing customer expectations for insurance in the EMEA region, its research shows that 45% of senior insurance executives believe rapidly changing needs and expectations of customers will be the main growth challenge over the next three years.

2. Regulatory pressures only intensify

Changes in the insurance industry are often catalyzed by regulatory changes, affecting the way insurers do business, interact with customers and process data – and more changes are on the horizon.

This is evidenced by the introduction in January 2022 of new FCA rules regarding pricing and automatic renewal remedies, premium funding disclosure rules and reporting requirements, as well as glossary and regulatory changes. ‘administration. This is just the latest package of insurance reforms that will require a deep adjustment of the underlying processes and systems in order to successfully achieve and maintain compliance.

Other changes in the industry will inevitably follow – and companies need to ensure they are agile enough to respond to these future regulatory changes before compliance deadlines run out, penalties are imposed and trust builds up. consumers suffer as a result.

3. Cybersecurity in the digital age must be at the forefront

Increased digitization is of course bringing cybersecurity to the fore.

With insurance ecosystems covering an increasing number of insurers, technology partners or suppliers, security – both within a business itself and throughout the supply chain – should be a priority in the digital future of the industry.

It will be an ongoing challenge. Recent insurance industry cybersecurity research found that 38% of insurance IT decision makers admit their business lacks cybersecurity skills. oil and gas health care.

The insurance industry will need to be at the top of its game to identify and address these rapidly evolving threats, but there are reasons to be positive. Cyber ​​security is high on the radar of insurance business leaders – 70 percent of them cite the issue as a top IT priority for 2022.

IT is out of its digital box

IT teams are on the way to moving beyond a siled part of the business. Technology will be at the forefront of coping with the pace of change and solving looming challenges.

In my experience with BGL Insurance, our technology teams were essential in driving the shift to remote operations. Thanks to our talented experts and carefully selected external vendors, BGL was able to move all of its contact center operations remotely in just eight days, eliminating interruptions to internal operations and in direct contact with customers during the process. transition.

Not only was our management team able to make rapid and immediate changes to our operating model, but BGL used this increased agility and operational resilience to explore several new technology offerings:

• The accelerated use of digital voice, AI and naturalness

language processing (NLP) in our contact centers, including working with Google Cloud and Twilio to deliver an NLP pilot from initial idea to proof of concept in as little as four weeks.

• Become one of the first vendors in the industry to use machine learning to fight policy fraud – contributing to a reduction of over 70%.

• Focus on customer self-service during the contactless pandemic period, allowing insurers to provide automated and personalized services to their policyholders.

Technology is just the starting point – we need to build for continued operational agility and resilience

From my position as CIO, there are three key ingredients for insurers, technology providers and suppliers to firmly establish themselves and establish a platform for continuous improvement in an increasingly digital industry:

• Attract and retain the right people – make sure you have the technical skills in place to meet business priorities now and in the future.

• Instill good engineering practice – promote an IT philosophy that helps define problems, develop models, analyze data and design solutions.

• Building and sustaining the right culture – the above ingredients are not achievable without a strong corporate culture to attract tech talent and a collective desire to use technology to move a business, its employees, and its customers forward.

But none of this is possible without a talented technical team, trusted partners, and an IT architecture built on APIs and services.

It is exactly this type of collaboration that will shape the success of insurers, their partners and suppliers in the years to come, ensuring that we are agile enough to tackle emerging industry challenges head-on.

Deloitte agrees in its research, noting that “insurers will need to take an ecosystem approach that involves partnerships and outsourcing, as well as internal teams. It will take a lot of effort to move from a legacy position to a flexible and open architecture.

Stay nimble to seamlessly change digital priorities

After a period of intensive digital transformation that has undoubtedly brought continued business benefits, business leaders find themselves at a crossroads. They can either sit back and reap the rewards of recent digitization efforts or continue to develop an IT-led problem-solving culture to continually refine and improve business processes.

Working on the maturation of this digital ecosystem will help insurers maintain this increasingly vital level of first-class customer service, while addressing the twin challenges of tighter regulation and cyber threats.

But remember, technology isn’t a silver bullet for all business problems – people, processes, and culture are all essential to lasting digital success.

Steve Woodford, CIO, BGL Insurance