London market needs to shift its mindset on technology
Buying more technology is not the solution. Thinking and operating differently is the key to bringing about change.
For some time now, I’ve been grappling with the conundrum of why the insurance arena isn’t adopting digital as quickly or effectively as it might. I recognise the challenges are many, including time, money, mindset, but also, perhaps, understanding the benefits that technological innovation can deliver.
Any architect knows the foundations of any building needs to be solid and reliable. However, many businesses are struggling to unite their corporate landscapes, due to many moving parts.
Hence the foundations are a bit like molasses, unstable and a by-product generated from years of growth, acquisition, mergers and the continual battle to integrate different systems.
Online quoting is fashionable at the moment, but it is not the whole answer.
Global demand for online trading continues to rise and although relatively easy to deploy, I believe it will only provide benefits if it is the beginning of the journey towards Straight Through Processing (STP).
A few years ago there was a clamor for e-commerce. Many large organisations were offering an online presence for ordering their products and at the time this was impressive. Yet, as you entered the details into an attractive front end, little did you know the company had to rekey everything to enable processing and delivery.
Creating a slick front end might enable you to quote and bind and more, and even deliver some initial benefits. Yet if the rest of your estate cannot cope with this data you are just moving the challenge to a different part of the business.
Many senior stakeholders I meet are clear about where they are and indeed where they need to go. However, almost all are unsure of how to transition - and in some cases, even how to start the journey. I truly believe that changing the traditional client/vendor dynamic to a true collaborative/partnership model will begin to unlock these challenges.
Improving and utilising technology is only part of the solution to bring costs under control. Global industry expertise, relevant transformation skills, an understanding of the job to be done and a good portion of common sense are all other vital ingredients.
Yet, the 2019 Gartner CIO Survey found that by year-end 2022, “70% of insurance business ecosystems will still be elementary and based on simple distribution models, failing to create new business models”
It is critical to build future ecosystems on strong foundations.
The global market potential today for business growth is staggering, but unless we get the foundations under which we build future ecosystems right, it is a pointless and costly exercise leading to superficial or cosmetic changes. It also delivers no real value or required outcomes and is certainly not moving the dial.
The 2019 Gartner CIO Survey also recommended that to be true digital leaders, life and property/casualty insurance chief investment officers “must develop a comprehensive understanding of both their firms’ organisational readiness (heavily influenced by their corporate cultures) and the market conditions in which they operate.”
So, digital transformation is important, but the survey also predicted that “By year-end 2021, traditional insurers that prioritise digital cost optimisation over business model transformation will significantly reduce costs while still realising business growth.”
Yet, the decision to change cannot be down to one person. It needs to embrace the whole organisation as well as relevant partners. Executives are setting strategic objectives, while IT is focused on maintenance and the business is screaming for change.
Collaboration in these three areas is vital to agree strategic objectives and desired outcomes; in fact, I would go further and suggest if this is not the case then failure is the only assured outcome.
It is time to refine the sugar and lose the molasses.
One no longer has to imagine ‘what if’. The relevant technology is here, now, to enable companies to improve their distribution capability and ensure the capacity is available where needed.
It is already possible to capture risks at source in a dynamic digital Acord standard proposal form. This data set can then be transported and augmented from trusted sources through the entire supply chain and arrive at its final destination in a format that can be consumed by all interestedparties, providing instant real time insight.
Portals are beneficial, standards are really important, but thinking and operating differently is key to bringing about different business outcomes. Simply buying more technology isn’t necessarily the answer.
The time for doing nothing has past and our industry is under real pressure to change. The global market is highly competitive, and one could argue certain territories are ahead of others in their adoption and use of technology.
It is interesting that the technology has been available for many years, but perhaps there have been too many concessions during implementations or maybe it has been sold in a way where the risks appear to outweigh the genuine benefits. Add to this the ‘fear of change’ dynamic and we begin to understand why the adoption may be considered slow.
Today, we need to think differently and look at insurance differently. We need to step back and take look at the big picture, but I do not mean just replace everything.
It does not have to be ‘big bang’ strategy. Options can include renovation and integration with legacy. At Charles Taylor InsureTech we believe that the combination of technology awareness and global sector expertise, coupled with visionaries from the industry, relevance and common sense will begin to unlock the puzzle, mitigate the fear factor and allow the journey to begin.
One final thing: the mindset of all parties plays a really important role in this change. Unless we start doing things differently and together, we will without doubt end up in the same place with the same outcome.
Author: Tony Russell, Chief Commercial Officer, Charles Taylor InsureTech
Published in Insurance Day 19 August 2019