“A journey of a thousand miles begins with a single step…but it helps if it’s bold and in the right direction!”

The insurance industry is at an inflection point – the digital challenge and changing needs of a younger generation mean that insurers need to adapt quickly to the demands of tomorrow’s customers or risk becoming obsolete.

“Failure to develop an effective digital / direct distribution channel will mean long-term market share decline”

CSFI Insurance Banana Skins 2017

All the while, the legacy technology platforms prevalent in most Insurers mean that major transformation is needed to enable customer-focused digital offerings and to increase efficiency through minimising platform and administration costs.

The CSFI Insurance Banana Skins 2017 survey of the risks facing Insurers highlights that the industry is aware of these challenges and recognises change management, which will enable the transformation, as the #1 banana skin faced by Insurers.

“The pace and scale of structural and technological change confronting the global insurance industry is the biggest risk it faces over the next 2-3 years, according to respondents to the latest Banana Skins survey.”

CSFI Insurance Banana Skins 2017

“58% of senior executives within the Insurance industry recognized that they’re actually lagging behind other financial industries.” 

Willis Towers Watson survey

Recognising the change management challenge is akin to knowing that a thousand mile journey lies ahead, but not everyone will be clear on what the first step should be. Many change management frameworks have developed over the years and most large organisations have adopted their own principles and processes that are applied to all change programmes embarked upon. However, the unfortunate side effect of having an established process to follow is that it encourages too many change participants to focus on the process rather than the value that they are trying to create. This in turn creates an unnecessary overhead of “change” managers and an illusion of proper governance that unless managed very carefully can create a stifling environment where nothing gets done and nobody is held accountable.

The good news is that it doesn’t need to be this way! Introducing greater agility into the way that change is managed can have several beneficial impacts for an organisation.

Greater focus on value creation

“The three highest risks form a cluster around the theme of technological change and industry response. The top position occupied by change management reflects concern, even doubt, about the industry’s ability to address the formidable agenda of digitisation, new competition, consolidation and cost reduction which confronts it.”

CSFI Insurance Banana Skins 2017

To be relevant and contemporary, the Insurance industry needs to ‘renew’ its legacy systems & operating model while finding a ‘new‘ way in digitally engaging its customers and other stakeholders in the value chain. This requires a relentless focus on value by:

1. Re-imagining customer engagement;
2. Improving operational efficiency; and
3. Experimenting with new business models.

In order to start imagining the ‘renew & new’ paradigm there are three critical dimensions that an organisation needs to transform on:

• Time to market: Optimised ‘lead time’, where there is a capability to do zero touch deployments which can promote small incremental changes into production within minutes – value based delivery
• Learning from the customer: design thinking and lean start up operating model with frequent show and tell – focusing on outcomes
• Continuous everything (testing, delivery, deployment, learning, improvement): create opportunities for early and frequent feedback, reflection and retrospection – learning faster than the competition

The organisation needs to respond to this drive for speed and align more closely with its customer needs. This is often done by enabling and empowering teams using a “Lean Startup” approach with a true agile belief system whilst creating opportunities for fast learning.

More value derived from engagement with specialists

“Respondents made the point that using technology to improve internal processes will be key to minimising insurers’ administration costs – which is necessary for their long-term survival. However, the cost of migrating antiquated and fragmented inhouse policies into a modern system was described by one P&C insurer as ‘staggering… and so most insurers do not’”. 

CSFI Insurance Banana Skins 2017

A common move for organisations facing a significant change event is to call in the consultants – a particularly welcome move given the profession of the author of this article! However, consultants hired are often required to conform to an organisation’s rigid change management framework, which can have the negative effect of preventing them from deploying their expertise fully.

Taking an agile approach can lead to several beneficial outcomes, including:

• Required change is broken down into bite-sized chunks, encouraging engagement of key employees, increasing empowerment levels and better integration of consulting resources; and
• Focus on shorter term delivery cycles enabling more checkpoints on value delivery – greater visibility of delivery encourages more focused accountability.

Improved engagement and accountability allows organisations to sweat the hired help a lot harder, which in turn leads to greater value for money for every £ spent on consultants.

Confidence in partnering with third party InsurTech providers to deliver focused solutions

The finance director of a life insurance company in the UK said:

“Legacy platforms are prevalent in most life insurance companies, and run at high cost and often with lack of proper support arrangements. Life insurance is way behind most industries in digitising its offerings. It’s hard for many to be able to interact with customers using anything other than telephone or letter, and this needs to change fast”. 

CSFI Insurance Banana Skins 2017

Insurers, like companies in other industries, should stick to their knitting. They aren’t software development houses and shouldn’t try to be. The Banana Skins survey highlights that technology is a critical enabler of Insurers’ future success, even survival. Therefore, partnering with third party specialists who are commercially incentivised to deliver higher quality products at a lower comparative cost to the Insurer would seem to be a no-brainer. Why try to do it yourself when you can engage specialists who have done it countless times before and have an established track record of success?

Insurers who recognise the need to buy in pockets of expertise, and adopt an agile approach for implementation, are likely to see more predictable costs and delivery timelines. Therefore the premium paid for the external specialism is more than compensated for by the gains in value realisation and improved implementation timeframes. An added benefit is also likely to be significantly lower impacts of projects on already constrained internal business & IT resources, often referred to as SMEs, because external companies are specialists themselves and bring the right expertise to the table. This benefit can also minimise the need for internal resources to build expertise on a one-off and throwaway basis.

Finding the right InsurTech partner is key to success. They should have deep industry knowledge. They should have a world class development team with proven results. They should be nimble and agile.  They should partner with you, not work for you. They should capitalise on your legacy systems where possible – not force you to replace your entire infrastructure.

How Holley Holland Can Help

Holley Holland can help organisations with their thousand mile journeys and ensure that their first step is bold and sets them on the right course. Holley Holland is unique in that we combine consultancy, IT transformation, FinTech and InsurTech all under one roof, all of which means that your organisation can benefit from an end-to-end business partner that understands your needs and delivers efficiently by accessing the right resources at the right time. Key areas where we excel are:

IT Transformation

Advising and embedding agility into the transformation journey, delivering value through:

• Developing enterprise-wide agile strategy for people, process and tools – being agile rather than doing agile
• Aligning business and strategy engagement, optimising ROI from transformation, delivering value more quickly through focused investment in targeted areas
• Embedding goal oriented DevOps implementation roadmap, improving time-to-market and better production stability

Business Transformation

Market practitioners with subject matter expertise in agile transformation within the Insurance industry, with a particular focus on:

• Bulks Investment Services – helping Insurers to develop the capabilities needed to complete effectively in an evolving Bulk Purchase Annuities market
• Transforming legacy business applications into customer-centric ‘Amazon-like’ digital platforms to modernise services provided by Insurance product retailers
• Designing and implementing end-to-end operating models, often with supporting agile technology components

Digital & Tech Solutions

Providing innovative solutions that meet the challenges that today’s Insurers and Brokers face:

• HUGHUB – a unique, customer-centric digital insurance solution, providing insurance retailers with an Amazon-like buying journey whilst improving operational efficiency
• Data Lineage tool – managing your data lineage requirements
• Stressrep – tool initially developed to support banks with their regulatory stress testing filing obligations, which can easily be adopted by insurers to help them capture core data from their agents/brokers as well as consolidate regulatory reporting requirements
• Tailored solutions – custom-made technology