Insurance: How To Develop The Human Element of Digital Transformation?
Rob Clarke - Director of Consulting

Insurance: How To Develop The Human Element of Digital Transformation?

Insurance. Whether you’re ‘in’ or ‘out’, the industry is here to stay but is facing some of its biggest challenges yet.

Insurance is one of the oldest industries around. The earliest known incarnations of ‘insurance’ was found in 3000-2000 BC. It’s been around so long, it’s even found inscribed on the Code of Hammurabi, the first written laws. Now that’s some history.

I remember when I started as an Underwriting Assistant at Royal & Sun Alliance in 2001. Newly into the world of work, I was just chipping away at the complex and long-established ways of working when 9/11 hit. And the whole world (and market) was thrown upside down. Plunged into a hard market, the approach for the first year or two of working in underwriting was straightforward. Price to the risk. The customer could take it or leave it. Deals were done over the phone, face-to-face and in a pub on the Friday afternoon. From a customer-service standpoint, it was easy. You did what you wanted as they were held hostage by the hard market.

Fast-forward through the years and the soft market is firmly embedded, with little evidence that it is going away anytime soon.

Many have already invested in customer experience initiatives (both for the end customer and their business partners) to make themselves stand out from the competition.

Increasingly now, however, the ‘differentiation focus’ is shifting to the impact of technological disruption on the marketplace. Not only are insurers having to consider how to insure completely ‘new’ things (Crypto currencies, cyber risks etc), but their customer is used to a new way of interacting with businesses. All that investment in ‘old-world’ customer experience is now looking a bit clunky.

Moving out of the insurance world and into consulting. It became quickly apparent to me how hamstrung many insurers are in the modern way of working. Legacy database systems, a shift towards ‘self-serve’ and pressure on profit lines all pose their unique challenges.

What are the digital transformation trends in the insurance industry?

Like in the wider world of business, the balance of power is shifting even more towards customers. New and ongoing social trends will shake up traditional ways of working in the insurance industry, resulting in an increase in consumer power.

Customers (consumers and businesses) are increasingly demanding simplicity, transparency and speed in their transactions with businesses, including insurance agents, brokers and carriers. The relentless march of connected technology is continuing to fuel this change in customer expectations, presenting a huge challenge for the insurance sector.

More and more insurance will be ‘bought’ by customers as opposed to being ‘sold’ by agents destroying the age-old wisdom of ‘insurance is sold and not bought’. This fundamental shift is forcing insurers and agents to re-examine their roles in the insurance value chain and become more relevant to the end-customer.

Another digital transformation trend will be the attention to Millennial customers. Trailblazers in similar sectors (look at the rise of Monzo etc.) are proving that to win over the Millennial, you need to innovate and not get swept along with the currents of age-old established ways of working.

So, what does that mean and why am I mentioning it?

Essentially, the focus right now is Digital Transformation (DX) and ‘Insure-techs’ is all good and timely. We see similar focus in other sectors.

But the crucial thing most businesses are missing is this – people need to DRIVE the machine.

No matter how much automation you pioneer, no matter how many staff you rationalise through AI-implementation efficiencies, there are still employees directly impacting your customer’s journey.

At Blue Sky, we are experts in the world of transforming customer experiences and embedding winning cultures into businesses.

One of the challenges we are increasingly being asked to solve is “How do I bring my people along with the digital transformation change that my business is undertaking?”.

I totally get the challenge here and I’ll explain below how we typically tackle it.

In the world of insurance, I’d also be asking “…and how do I also drive great customer experiences once we’ve gone digital?”

Let’s look at the two buckets: your company and your customers.

The first bucket is your company. It’s all in cracking the ‘human code’ for your people and your own business to embed the change in the first instance.

  • Create the right Climate within your business for change. In the insurance world especially, where average job tenure is very high, Climate becomes challenging to shift. How do your front-line leaders support the messaging and the climate? If you don’t invest here, you’ll meet the ‘here we go again’ sentiment around change.
  • Provide Clarity in your story and direction. People need to not only ‘feel’ onboard but understand what the world is going to look like and their role in it.
  • Have powerful Conversations. Know what drives the right conversation and use that to get the right outcome from your interactions. Can your leaders role model in this new world? Do they understand the mindsets required of their people and can they boost and uplift their team’s performance in a new landscape of business?

The second bucket is understanding the customer and designing the experience that the various channels will take them down. You can have all the technology in the world, but without designing those solutions around what ‘works’ in the world of customer, you’d be wasting your money.

A prime example of digital transformation management is Amazon. Super-technologically equipped – especially when directly compared to the insurance world. They have email, webchat, call-back etc. Accessible by both mobile platform, app or online. They also understand that a customer wants a ‘channel of choice’. If you want to speak to someone, you should be able to. Simple as that. So many businesses miss the point and force a customer down ‘their’ route of preference – anyone tried finding the phone number for their insurer before, only to give up 20 minutes later?

Amazon make recommendations – when selecting how to contact them, one option will be highlighted as their ‘suggested’ way of contact them. But they do not force you to choose it.
So, we typically recommend understanding what the great ‘current world’ customer experiences look and feel like in your business.

We spend time understanding this and defining (what we call) ‘ninja’ elements through observing your highest performers. When you overlay the new proposed processes, how do these enhance or potentially damage your client experience? Will you create a whizzy new self-serve application that forces someone down that route, irrespective of their preference? The human element of digital transformation is a critical component that needs to be understood, protected and enhanced!

Many insurers are excited about the potential cost-save associated with some of these tech-solutions. Ignoring the (sometimes huge) costs of driving DX within a large, established insurer – they are exciting! But only if you retain your customer in the longer term. Otherwise, the next disruption will be how to undo the damage caused by poorly implemented DX in the industry.

If your company is preparing for a major DX shift, then we are here to help. Call us on 01483 739400.

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