An insurtech veteran to insurers: Digital convenience is make-or-break for incumbents

Insurance is a unique industry, typically slower to adapt to new technologies and one with fewer individual customer interactions. However, those that happen are even more crucial. Digital technology can help the industry, often slow to change, radically improve and develop a deep and meaningful relationship with customers. It can be a challenge for large companies accustomed to managing long-term risks to realize the opportunities of digital, agile, and being innovative. Traditional insurance business models are being challenged and innovation is the key to ensuring the industry is ready for the opportunities of the future.

However, expectations from customers, new entrants in the market, and emerging digital platforms are forcing established insurance companies to transform how they work and interact with their customers.

A key contributor to the changes in the insurance industry is the emergence of new insurtech players, platforms and digital capabilities. This enables new ways of engaging with customers, including how they learn about insurance, receive quotes, purchase policies and service their accounts. Many new entrants are focused on specific elements of the value chain. New ways of using data are critical to the future of insurance in managing and assessing risk, developing a deeper understanding of customers, deepening customer relationships, and making faster decisions.

These newer entrants continue to place enormous pressure on established insurance companies, who now have to find new ways to work and collaborate just to keep up. But they also create new opportunities!

Customer expectations have been set outside of insurance, impacting how insurance companies must engage with customers - basically the old ways will not be the future ways of working.

Internally, insurance companies need to perform gap assessments to understand how to respond to external forces, competitive threats, and customer needs. This starts by establishing a North Star vision, defining where they need to be and how they need to work with customers.

Defining capabilities gaps will help define a roadmap to achieve the North Start and realize competitive advantage.

One key in deploying new digital capabilities is a strong focus on modern digital marketing and a technical stack that supports speed to market and engaging with a customer digitally across channels. Platforms must enable an excellent customer experience that adapts to customer needs based on who the customer is by leveraging customer data. The platform must also enable rapid business changes.

It’s critical to have the right stakeholders involved in a software selection process due to the complexity of insurance, diverse business needs, and the multitude of processes involved in managing products.

Having the right mix of people involved is fundamental to success, including the people representing the customer in marketing, distribution, and product as well as enabling functions (e.g. IT). The selection team should start by focusing on the customer and their needs, as well as the business strategy and goals. Since this is often a tech migration and integrations will be critical, it is also a priority to have people that are familiar with existing technology, those focused on emerging technology, and those familiar with the various processes involved within insurance.

After you find the correct stakeholders, you must work to ensure alignment. Once everyone understands and supports the North Star, the next step is discussing business priorities and capabilities. With digital, rather than building out a huge set of requirements for the next years, focus on the vision and priorities, knowing agile and frequent releases will be the approach to deploying new capabilities - always learning, assessing and improving as you move to the North Star.

Next, it’s time to build the foundation of experts and products that allow you to work at the speed of digital and leverage best practices. Scan the market to understand the existing capabilities, flexibility, and ability to evolve and grow with the organization.

Analyst groups can broadly assess the market, from best-in-class and leading solutions to those emerging. With so much investment in insurtech, one person can’t know everything about the market.

Analysts can provide an initial scan of the market and help you understand the existing capabilities and new products available to map capabilities to business needs. These analysts also have a vast knowledge of the customer journey and particular business needs, which helps identify which tools can further enhance the platform and integrate with newer solutions and existing legacy systems.

Insurance is an industry with a heavy set of legacy technologies. Companies need to maintain an open mind regarding new ways of working and focus new tech on what is most impactful to customers and the business. Having the right team, culture and mindset are critical to success. Working collaboratively and being flexible is crucial to do that from a digital perspective.

Insurance companies need to identify their partners to help realize the North Star vision. From product vendors that bring knowledge of new systems, internal teams with a deep understanding of existing capabilities and business perspectives, analyst groups that help educate, and service providers that provide best practices. These stakeholders must be brought together as part of a consolidated but extended team.

Digital has forced us to make all of these groups work together. It starts by understanding the customer journey and how technology can talk to various siloed systems. Hence integration is key to making everything work together and delivering an experience through multiple channels.

Insurance has grown up in a very product- and channel-centric sense. Before digital, a product was developed to be delivered through a particular channel. Now, with changing customer expectations, more channels are required to reach the customers where they want to interact with us.

Brands need to learn what their customers are experiencing and make it easier. Not only to help people understand their needs and find the products that align with them but also to help customers manage and prevent risk to create deeper relationships with customers.

The amount of data gathered from customers can create a long list of to-do items for insurance companies as they look to create new products and services and improve customers’ experience. But how can insurance companies manage their to-do lists when it’s already packed and constantly being added to? How can you prioritize?

Start with the North Star and the customer priorities with an iterative approach. Foundational products and platforms are essential but must also allow gathering feedback, improvement, and scaling as companies respond to market changes.

In a world with constantly changing customer expectations, needs, and demands, finding vendors and products with a philosophy of being amiable with other solutions, both new and legacy, is important. It’s often the deciding factor. Having completely vertical siloed solutions is a non-starter as these tools must be able to work with others in the same ecosystem, now and in the future, and the right architectural approach allows for that.

Digital talent is often frustrated with legacy environments and the slower pace of insurance. However, legacy must be respected.

Having the right talent is the most crucial aspect, as you need the right people with the focus, skills, and ability to learn. If existing staff have never used a product before, they will need to be able to learn it. Doing this means partnering with the product company or vendors that know that product and talent with a digital mindset to learn it. These basic skills are necessary from a digital perspective, i.e., the ability to learn and focus on the customers’ needs and the ability to innovate.

Adopting a new digital solution requires insurance companies to implement an effective governance and change management program. For example, if you’ve brought in a new global platform that replaces other local tools people have a vested interest in, you need to work to understand how the tools are used, any gaps and ensure everyone understands the new capabilities and value to them local and the organization as a whole - not to mention how to manage this globally respecting and balancing local needs and global scale.

Questions that staff may ask could include:

In the digital environment, like all environments, you need to remove the threat people may feel. People might not feel they have the right skills to do the job if you take away a tool they spent years learning.

Constant learning is important, and it’s important to point out that when the company swaps tools, it isn’t a threat but an opportunity. This starts by explaining why you’re doing it and why it’s valuable to the customers, the business, and the employees. This provides a map of how everyone will work together on the journey, including training personnel on new capabilities.

Many new tools and capabilities are changing how companies work, how we do our jobs, go to market, and serve our customers. The reality is that many people don’t trust insurance companies. However, that trust is built by engaging with the brand, and consequently, how companies reach out to customers using digital is important.

Building trust with customers means understanding the customer and aligning with their needs. Insurance companies may ask themselves:

Life is evolving and what we think about at age 25 differs from what we believe at 35 or 45. As an insurance company it is important to understand the customer's life journey and adapt to it. The key is to show that the company can grow with the customer and be there throughout the journey - providing useful information and products. The right tech can help reach customers, understand them and build relationships.

Partners and vendors are part of the journey, and for insurance companies to succeed, they are needed.

Insurance companies expect vendors to invest in understanding the company and their needs, the business objections, and the current technology environment. Doing this helps vendors determine what their role will be.

Sometimes it takes time. Vendors need to invest beyond the product’s cost and train people on it. Those are the expectations a company has even more in the digital landscape.

The foundation for insurance companies’ success is to focus on the business objectives and the customer needs. This means being customer-centric, understanding the customer and the business needs, and aligning everyone around these areas.

As you walk down the journey, it’s harder to manage change without full alignment. Communication and collaboration are also critical, raising issues and concerns early and honestly to reduce risk and alleviate friction.

Another key consideration is that any platform chosen must be able to meet enterprise scalability requirements. The platform must also be flexible enough to meet business unit and local needs. Companies must be able to tailor their digital platforms while realizing the benefits of enterprise scalability.

Insurance is a heavily regulated industry, even geographically, as things work differently in the US than in Argentina, Chile, Germany, or other countries. As such, the ability to respond to local needs, different lines of business, and products is essential.

The technical support from a composable DXP provides much-needed flexibility and adaptability to cope with different requirements while allowing insurance companies to remain focused on the customer.