Insurers are prioritizing incorrectly for digital excellence
Insurance companies have trouble finding the most effective starting points for digital transformation, and lean too heavily on simply making existing processes more efficient, according to an industry analyst.
Kimberly Harris-Ferrante, distinguished analyst for Gartner covering the insurance sector, said in a talk on organizational readiness that time and again, insurance companies cite cultural issues in the enterprise as a reason their firms are resistant to change. Carriers are plowing ahead with some initiatives that they think will help them become digital, but without laying the right cultural groundwork, those initiatives get stuck on the periphery or are destined to fail, she said in her remarks at ACORD Connect 2018 in New Orleans.
“We’re not good at creating a vision and strategy, but we’re good at changing,” Harris-Ferrante says.
Harris-Ferrante said Gartner looks at eight key components that all have to be in place for an organization to be considered ready for digital transformation:
- Vision and strategy
- Organizational execution
- Budget and funding
- People and staffing models
- Data mastery
- Exploration of new business models
- Modern IT strategy and emerging technology adoption
She cited a survey of 50 insurers by her organization and ACORD, which found that two thirds of insurance carriers are implementing change management and more than half are working with insurtechs and trying new IT staffing models, but less than half have a dedicate digital budget or documented digital strategy, and only about one third have a business ecosystem strategy or a chief digital officer.
The inertia within insurance companies is not present within the competitors that are coming down the road, Harris-Ferrante continued. That includes big tech companies like Amazon, whose interest in the insurance industry seems to be growing daily, but also insurtechs like Lemonade.
“Big [insurers] have hackathons and ideations, but the other guys are doing that every day,” she says. “And if it doesn’t work, they throw it out the window and start it all over again. Everyone is responsible for tech and ideation.”