Chubb.

Travys Wilkins

When we look at digital transformation in the insurance industry, what are the key areas that we look at?

The focus seems to always be on the automation of distribution, sales processes, and customer User Experience (UX). Whilst this probably is the most important part as it drives revenue, we often overlook the importance of digitizing operational processes that result in both increased profitability and operational efficiencies that decrease man hours.

Looking at any digital transformation strategy, it is important to have both an isolated and holistic view with a thorough impact analysis on the business to identify which areas are most viable for transformation. This will also allow for prioritization and resource requirements to be built into the plan.

Some key considerations, amongst many, when looking at our industry are legacy systems and integrability; security factors including cloud based versus on premise – generally a combination will work well, especially where high volume transactional data is being processed; data storage, harvesting, and utilization.

The last point has seen a huge drive over last few years in “Big Data”, where we’ve seen the use of Artificial Intelligence come into play to analyse and effectively use data for areas like underwriting risk, behavioural science, and marketing.

Looking at the industry and many of the different strategies used, there seems to be three clear trends to enabling the digitization strategy:

1. Investing in building technical solutions in-house.

2. Licensing technology.

3. Acquiring insurtech businesses.

"Whichever option is chosen to realize the digital transformation strategy, it is important to ensure the tech solution is built for scale."

Each has their pros and cons but it’s important to ensure insurers do not lose focus on what they specialise in. Insurtechs, both licensed financial institutes and non-licensed, are first and foremost tech companies that generally specialize in building scalable technology and not product. What they do well is automate processes end to end and create efficient policy administration platforms.

Underwriting and product is secondary where insurtech is licensed and is often provided by a partner insurer.

We’ve seen many of these insurtechs being acquired by large insurers to enable all, or part of their digital transformation strategy, and to enable penetration into new markets where the expertise does not lie in-house.

For established insurers, it’s important to decide whether they want to play in the insurtech space or focus on underwriting and product innovation. For the latter it’s sometimes best to license software that will enable them to achieve their digital transformation goals, which requires substantially less capital outlay and quicker implementation timelines.

Whichever option is chosen to realize the digital transformation strategy, it is important to ensure the tech solution is built for scale. We hear a lot of terms like “modular” or “low/no code” which is important in ensuring the replication of solutions for various channels and processes, and the ability to implement changes quickly.

I am excited to see what the next few years hold in store with AI, IoT, and other technologies forming the basis of the fourth industrial revolution it has already and is bound to have further positive impact on our industry.