Insurance Transformation: making sense of the

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Insurance Transformation: making sense of the technology and data revolution

I firmly believe that over the next 10-15 years the insurance industry will be transformed through the use of advanced technologies such as artificial intelligence and blockchain. This will be coupled with access to incredible amounts of data collected through real-time sensors connected to our homes, cars and bodies, as well as commercial assets such as trains, bridges, buildings. And let’s not forget transaction and behavioural data from all of the technology services we interact with such as banking, taxis, retail. The potential insurance products and services these will enable are as yet unknown, suffice to say that they will be much more tailored to meet the individual needs of customers, as well as more closely reflecting the risks presented by that individual customer.

The current insurance sector is a long way off this vision, although the essential building blocks are underway with various degrees of urgency and commitment across the sector. For example, real-time data and algorithms are providing 24/7 pricing in competitive markets such as car insurance; telematics in cars are beginning to provide real-time data to car insurers and breakdown services, allowing policies and pricing to be adjusted for actual usage, driving behaviour, or automatically activating claims processes following an accident; smart contracts on the blockchain are being piloted to dramatically simplify claims management. Each of these examples provides a glimpse of the future, yet we are very much at the early stages of the transformation of the industry, and like it or not, in order to survive insurance companies will need to become technology and data companies that specialise in insurance, rather than insurance companies that use a bit of technology and data.

Of course it is not quite so straightforward, as technology and data simply create a capability, but by themselves deliver no value. Value is created by the business delivering unique value to the customer. To achieve this insurance companies must be totally customer-centric, using technology and data (both proprietary and public) to generate real insights into understanding customers and more closely offering what they need. And it goes without saying that all of this must be done efficiently to ensure a level of profitability.

How to navigate all of this

This level of industry transformation is unprecedented, and requires a transformation of the business model and culture, as much as in the adoption of technology and data. No mean feat, not helped by the fact that the three main strategic challenges of customer-centricity, using technology and data to create differentiated products to meet the needs of targeted customer groups, and continuing to reduce operating costs through automation and process improvement, are inter-twined and mutually dependent. This drives the necessity to tackle these changes as part of a holistic, prioritised and joined-up change agenda.

Some firms will be undertaking large programmes of work whereas others will be focusing on smaller incremental goals. Whichever approach fits, there is a necessity to be proactively moving into a more technology enabled and digital operating model, shifting the processes, skills and culture of the firm to align to the emerging demands of the market. The industry may still be in the early stages of a major transformation, but it is now moving fast enough that firms will be left behind if they have not learnt to adapt.

Managing technology and digital transformation

Like it or not, technology and data will be at the heart of any transformation. Rather than list the pitfalls, here are a few tips for success.

Define and brand the transformation on the business outcome rather than the technology label – e.g. Artificial Intelligence Programme, even the more common Digital Transformation Programme – change is driven by a business need, and beware the technology driven initiative.

Break the transformation down into deliverable chunks that create value, reduce the risk of implementation, and allow the business change to keep pace with the technology.

Over-estimate the complexity and criticality of the data elements. In many businesses this is breaking new ground, and the current state of the data, along with the operational changes required to embed new processes to ensure future data quality and capture, often requires more work than anticipated. This can quickly breach the project critical path leading to delays and additional costs. Bring in expertise early and transparently manage stakeholder expectations throughout. Data issues often include fully understanding data definitions and make-up, data compatibility and integrity, data pathways and behaviour after it has been ingested onto the new platform, and complexity of integrations across multiple systems.

Stick to the essential scope required to deliver the core business value. This is a particularly tough ask, as there is huge temptation and pressure from the technology vendors to embrace all of the exciting functionality. However, all too often it is the ‘small’ additions that become the critical failure points.

Understand the dependencies across the full technology stack, from infrastructure through applications, mobile and data. Much new technology is now on the cloud and being offered by vendors as IaaS, or SaaS, or PaaS. These may be new arrangements for the business, that need to be integrated into the technology eco-system, with resultant changes in the roles and skills within IT, as well as the performance monitoring and network resilience protocols.

Pay attention to the quality and robustness of governance and oversight by the executive, business owners and the overall programme. This is standard stuff although it is all too easy to let the quality of governance fall under pressure. We need the leaders of the business to fully understand the risks, and be ready to take the prioritisation and trade-off decisions when they inevitably come.

Key Message

Technology, digital and data are all at the very heart of the industry transformation that has started, albeit in the early stage. Every insurance business will have to embrace the implications – greater reliance on technology, proliferation of data and data analytics, new skills, processes and governance, and in some cases wholesale changes to the operating model and culture.

For the incumbent firms in the market, they need to be proactively engaging in the revolution, otherwise they may well get left too far behind by their competitors as well as tech-enabled newcomers.

This article is the second in a series looking at Transformation in the Insurance Sector. You can read the first article here: Transformation in the Insurance Sector - a glimpse at the scale of the challenge

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"2025 and Beyond" Question and Answer session

26 Feb, 2024

Our webinar 2025 and Beyond: Why Your Hiring, Learning, and Culture Need to Evolve brought together thought leaders Enrique Rubio (Hacking HR), Lisa Skinner Källström (Teamtailor), and Hydrogen Group’s Dean Jennings and Michelle Miller. The conversation explored strategies used to tackle the challenges of the future workforce, shift organisational cultures towards lasting partnerships, and ensure teams are equipped for the age of artificial intelligence. _ The Q&A box was brimming! Our webinar offered participants the chance to consult our HR experts on addressing shifts in the people and culture realm as we approach 2024 and beyond. Interesting questions were raised, and we compiled them all to seek and reached out to our experts to get some definitive answers. For a recap on the webinar, check out our blog Navigating the Future: Insights from our Webinar "2025 and Beyond" So, here we are. Your questions - answered! - How can companies make people feel more secure in their jobs? Is it just a matter of increasing communication? Lisa suggested a shift towards a more sustainable approach. 'In recent years, we have seen many companies experience massive growth, and the need to get great talent onboard - hence offering extremely generous compensation packages. Unfortunately, many have now faced layoffs, and while the compensation and benefit strategies are not the sole reasons, I would like to propose a more sustainable approach for the future. [Increase benefits as the company grows, and as business results allow, we can increase pension levels or similar benefits – and discuss it internally! Open dialogue about results, investment choices, and their rationale fosters a sense of involvement among team members and signals the company's commitment to a sustainable direction.]' Dean echoed concerns about job security in today's volatile economy and advises, 'In today's uncertain economic climate, job security is a concern. However, by becoming indispensable and embracing tools like AI, individuals can enhance their value to employers, securing their positions for the future. Apart from using Chat GPT, what other tasks can be automated with AI? Lisa commented, ‘We’ve mentioned a few examples already, but I would look at all the systems your company allows you to use and question your suppliers on what features are or will be based on AI. For example, many applicant tracking systems allow the opportunity for AI to summarise CVs for an easy overview, generate interview questions and suggest more personalised replies to rejected candidates based on their CVs. Also, the opportunity for AI to transcribe an interview is an amazing tool which allows the interviewer to solely focus on listening and talking to a candidate as opposed to taking notes. As always, AI in these types of systems is not designed to make the decisions for a recruiter or business - but serve as an assistant to save time and work more efficiently.’ Dean added, ‘There are far too many to list. The AI directory https://aitoolsdirectory.com/ does a really good job of showcasing what does what and where you can find it.’ What is the impact of AI on employee engagement and how can HR teams use AI to promote engagement? Also, what precautions should professionals take when using AI? Dean offered his perspective by stating that ‘engagement and AI may seem contradictory, but there's a clear benefit when HR uses AI to streamline admin tasks, freeing up time for vital human interaction. Tools like Koios, for instance, offer Acoustic AI, helping HR understand team and individual personalities better, for more tailored approaches. Professionals must approach AI implementation carefully, ensuring ethical use to maintain trust and transparency in the workplace.’ How can we make sure our services stay personalised while using AI? Dean responded, ‘By leveraging AI to handle time-consuming tasks. The best thing about AI is that you get to choose what it does and what it doesn’t. If you feel strongly about human interaction to enable personalisation, you don’t have to let go of that – just embrace AI to make those interactions better. Get it to strip data in the background for you, or to type up your notes and actions as you have the conversations. The possibilities are endless, and they can be tailored to your needs.’ Within your businesses, have you experienced any resistance to the adoption of AI? How have you handled these objections? Dean responded, ‘A lot of the resistance I have seen has either been a fear of trying or a fear of being caught. There seems to be a negative connotation with AI, that if you get it to do something for you, are you cheating? The answer is a resounding no, you are working with the tools available to make yourself more productive for your organisation. Robot proof recruiter, if you haven’t read it, you should. Especially if you are a recruiter or if recruitment is part of your job role. I’ll spare you the details, but it is an amazing read that showcases the fact you can never take the people part out of recruitment - you’ll always be able to provide a better level of service than a robot (at least for now) and you need to focus on the parts of the process where human interaction is at its most vital and automate/utilise AI to get back time in your day to improve that social element of the process.’ Do you feel Employee Resource Groups will be on the rise with the future generation of workers? Dean replied, ‘A truly hybrid workplace cannot function effectively without the right technology in place. That doesn’t even need to be AI. For employees to feel a sense of belonging in a workplace, there should be a seamless experience that goes beyond just having teams up on 1 laptop in a room full of 30 people. Again, this will only advance with time ... my eutopia is to have my whole team (who are based in the UK + Thailand) sat around a virtual desk, on a beach with an interactive whiteboard we can utilise in real time via virtual and augmented reality. You may laugh now, but in the next couple of years, VR and AR tech will be the staple of hybrid working and teams coming together around the globe. This doesn’t take away from the in-person experience and nor do I think it should. It should be a tool that compliments real-time working solutions.’ How can we support older generation employees in the changing landscape? Dean offered his perspective, ‘AI is truly remarkable. It embodies the futuristic vision many of us had as children—computers and programs taking on tasks for us. For those uneasy about it, I believe it's a matter of not fully comprehending it or lacking the skills to use it effectively. AI has quietly become a part of the workplace, and many are still navigating its intricacies. The focus should be on empowering employees to leverage AI to enhance productivity and value to the organisation. Those who resist or fail to adapt won't be replaced by AI but by individuals who embrace change and view AI as a tool for greater contribution.’ How can we safeguard against the risk of AI stifling creativity in the workplace? Lisa said, ‘I would say the opposite, if we use AI for the more regular and routine tasks then we will have more time to use to be creative! For example, instead of spending hours on creating a presentation for an important project - let AI do this creating for you and spend the time on how you want to engage with your audience instead. Using ChatGPT to find easy tasks that I would previously have spent a lot of time on has been a big change in how I work and allows me find space in the day.’ Is there a regional divide across different parts of the world? Are Europeans more prone to appreciate safety/job security than Americans? Lisa commented, ‘My thoughts are that globally we have been through a lot in recent years, covid affected everyone regardless of location. After that, we had war in Europe for the first time in many years which had major effects on the economy, which I believe has made people appreciate job safety even more and value this in choosing their next employer. However, in some parts of Europe employees are still very protected by labour laws etc so I believe it is different from America where it is more common to have short notice period and less resistance from employers to terminate an employment.’ Expanding on the key themes discussed in our webinar, we're thrilled to introduce our Thrive Guide – a practical roadmap for building a thriving workplace. Within the Thrive Guide, discover actionable strategies to enhance employee engagement, foster diversity and inclusion, and implement flexible working models. Discover practical solutions to enhance workplace productivity and satisfaction. As our expert Dean Jennings emphasises, 'adapting to evolving workplace dynamics requires strategic initiatives.' This sentiment is echoed by other industry leaders in our webinar. In the Thrive Guide, these insights converge to offer practical solutions, providing a roadmap for organisations navigating change. Revolutionise your workplace. Download the Thrive Guide now!