In our book we talk about three kinds of operation – those that process materials, people or information. Insurance is an industry that is essentially an information processing operation. So you would think this sector would be at the forefront of the so-called digital revolution. But apparently it is not. I’ve come across a number of articles and blogs on consulting firm websites that discuss this. And this one from Bain & Company is typical.
Naujoks et al (2013) write – “Many insurance executives view the digital challenge as purely an IT topic, a social media play or a onetime conversion that could be resolved in relatively short order”. When in fact we know that the digital revolution is very disruptive and needs highly strategic approach in response to it. In particular, customers are expecting lower insurance premiums and policies customised to their needs. They are using the web to find this and relying increasingly on fellow consumers’ opinion to choose the right option.
Insurance companies therefore need to do four things according to Naujoks et al (2013):
- Integrate different distribution channels (brokers, call centres, web) into one seamless channel, adopting a so-called ‘omnichannel’ approach.
- Redesign core operations and underwriting in order to enable self-service, mine big data and adopt advanced analytics.
- Upgrade their IT platform and organisation.
- Have a clear and staged implementation plan.
Mind you, consulting firms would say this, wouldn’t they?