Making the leap:

Why the missing link between ambition and action is key to next-level insurtech

The insurance industry is in the middle of a global renaissance propelled by evolving customer expectations and transformational digital tools. These driving forces are paving the way for an insurance industry that is efficient, scalable, agile and personalized. Not only is the industry increasingly moving towards customer-facing benefits such as instant claims processing and tailored products and services, but new technologies are enabling companies to future-proof their businesses.

Despite worldwide financial uncertainty, industry data suggests 74% of insurance companies increased spending on AI last year, as 72% planned to invest more in cloud computing and 67% targeted an increase in their data and analytics spending.

Yet digital transformations that spark dramatic business growth are significant undertakings. Most leading insurance companies comprise complex decentralized organizational structures broken down by group, country and market (due to the nature of the regulations they operate under). Drilling down further, they typically sub-divide further into products, services and business units. In other words, implementation is being introduced against a complex backdrop of legacy workflows, ingrained hierarchies and crystallized attitudes.

To bridge the gap between old and new worlds, integrating new tech into unwieldy procedures and updating protocols that may have gone unchallenged for years, insurers need to think strategically. Here’s how:

1. Prioritize change management: Change management focuses on the human dimension, the people who make up teams. If people aren’t willing to get on board with new tools and processes, an organization is left with an expensive digital ecosystem and technology stack that no one uses. The key to avoiding this is involving people early and keeping them engaged.

A change management strategy helps achieve this. One way to do this is by ensuring the strategy is tailored to meet the needs of the organization it is being applied to. For example, companies should treat it as a starting point instead of taking an existing framework to use as-is, tailoring each element to its own distinct culture.

Northwestern Mutual, a $34 billion revenue insurance firm in the US, leads by example here. NWM wanted to roll out a new proprietary financial-planning tool called PX, but one of the biggest obstacles it faced was an entrepreneurial network of remote advisors with an established way of working. Key to achieving alignment between HQ and the frontline was a cocreation model that saw the advisors help build PX functionality – after which they became advocates.

2. Embrace Global Design Systems (GDS): GDS can help large insurance companies to create consistent customer experiences across channels. Simply put, GDS is a unified design language that transforms brand guidelines into atomic components that can be combined to create web pages or digital interfaces. It also provides the tools and processes needed for agility and scalability in tech and operations. While GDS is new terrain for the insurance industry, global companies such as Uber and Airbnb have used these systems successfully for years.

Similarly, the global music streaming service, Spotify, relies heavily on its Encore Foundations which sits at the center of its design system. Every designer, writer or engineer responsible for building a Spotify product must start their journey at EF.

Perhaps the closest brand in character to insurers that has embraced the power of GDS is Morgan Stanley-owned online brokerage firm E*Trade. E*Trade’s design language helps deliver a consistent and accessible UX while facilitating flexibility and scalability – important considerations given that Morgan Stanley spent $13bn on the business in 2020.

3. Adopt a Continuous Delivery Model

When approached strategically, a tailored continuous delivery model can help companies maintain the benefits of project delivery, such as agility, while providing more consistency in customer experience, design and governance. Successful tech firms such as Google and Spotify use continuous development to allow them to develop and release new features on a regular basis. With the insurance sector hindered by legacy tech and a very siloed structure, adopting a continuous development approach can help to accelerate innovation and decrease the cost and time involved in innovation projects.

The specific benefits of continuous development are that it’s a repeatable and reliable process. From a software engineering perspective it lends itself well to automation, allowing teams to automate repetitive tasks, freeing up time and budget. What’s more, because teams are focussed on continually improving a product or service, rather than quality control being a box that needs to be checked pre-release, quality becomes embedded into the process. As a result, new features can be released more quickly, team morale is higher and customer satisfaction levels increase.

Final thought

Insurers need to move deftly but with patience – because heavy-duty transformation is an ongoing, not a one-off finite journey. Developing a continuous delivery model, embracing GDS and prioritizing change management are key steps in the process, allowing insurance companies to meet customer needs better and more effectively. And that has to be a goal worth fighting for.