Insurers embrace CDO role for transformation
More than a third of insurance companies have an executive in the chief digital officer role, more than any other industry, according to a survey of the world’s 2,500 largest public companies by PwC.
PwC defines the chief digital officer as an executive responsible for the digital agenda at an organization. That means thinking more about the business case first than technology implementations, says Mathias Herzog, principal for PwC and co-author of the study.
“As organizations mature in their focus on digital, we see the fragmentation for executing those initiatives going away,” Herzog explains. A single leader unifies and focuses digital transformation efforts at a company, rather than individual business heads going in different directions, he adds.
The next-most likely industry to have a CDO was banking, at 28%. Financial services has had a “significant increase” in CDO hires over the past couple years, says Herzog. However, not all CDOs have digital as their only responsibility.
“We interviewed some execs where you have the CDO also functioning as the chief strategy officer and the head of tech operations,” Herzog says. But for insurers, 89% of the companies that had someone in the CDO role called that person the chief digital officer and had that as their only duty, compared to 67% of industries at large.
There is a case that digital is a technology subset, and therefore a CIO should be easily transitioned into a CDO role. However, only 5% of CIOs in the insurance industry perform the roles of the CDO, and the most common CDO background in insurance is marketing, not tech. Overall, more than half of insurance CDOs are internal hires.
However, Herzog says that doesn’t mean that CIOs are losing ground. “We haven’t seen the CIO report into the CDO,” he explains. “You have more of a co-existence – with a healthy tension in some instances – until those execs have figured out their working relationship.”