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View from the CIO: Digital transformation in the insurance sector was last year’s problem – three new challenges face our digital future

(Image credit: Shutterstock / aorpixza)

The well-trodden path of ‘digital transformation’ has been fast-forwarded over the last two years across the insurance sector, with pandemic-induced challenges sparking a much-needed digital rush. The results are clear to see. A KMPG survey revealed 85 percent of insurance CEOs believe Covid-19 accelerated the digitization of their operations and the creation of next-gen operating models and now, these digital priorities are set to shift again in 2022. Steve Woodford, CIO of BGL Insurance, explores three new challenges facing the industry and explains why IT teams are about to become front and center of business growth.

Nearly four in five senior insurance executives say Covid-19 has turbo-charged progress on the creation of a seamless digital customer experience, and spurred on the development of new business models and revenue streams. Those who adapted quickly will, by now, have stabilized their business to occupy a strong position in the market for 2022 and beyond – particularly around key differentiators such as customer experience – while those struggling ‘digital laggards’ will only continue to fall away. 

Now, with digital transformation in the rear-view mirror, a fresh set of industry pressures facing organizations in the insurance ecosystem lie ahead over the coming years. 

New pressures to come – make sure you’re in the driving seat

Business change is a constant, continually driven forward by factors such as industry trends, customer expectations and regulatory pressures. Business leaders cannot afford to stand still.

Here are three critical pain points insurers must address to remain competitive and mitigate threats before they affect day-to-day operations:

1. Increasing customer expectations 

Looking forward, insurers and InsurTech providers alike are having to recalibrate their products, services and technology offerings to match the rising expectations of an increasingly demanding customer base. Policyholders and prospective customers expect greater convenience, a broader range of services, and constant communication – all available through the channels of their choice. 

Deloitte confirms this. Following a comprehensive audit of changing insurance customer expectations across EMEA, its research shows 45 percent of C-suite insurance executives believe that rapidly evolving customer needs and expectations will be the top challenge for growth over the next three years.

2. Regulatory pressures only set to increase

Insurance industry changes are often catalyzed by regulatory changes, affecting the way insurers do business, engage with customers and handle data – and further change is on the horizon.

Witness the January 2022 introduction of new FCA rules around pricing and auto-renewal remedies, premium finance disclosure rules and reporting requirements, and related glossary and administrative changes. This is just the latest package of insurance reforms that will require extensive adjustment to processes and underlying systems in order to successfully achieve and maintain compliance.

More industry changes will inevitably follow – and businesses must ensure they are suitably agile to respond to these future regulatory changes before compliance deadlines pass, punishments are handed out and consumer confidence takes a hit. 

3. Cybersecurity in a digital age must be front and center

Increased digitization of course brings cybersecurity very much to the fore.

With insurance ecosystems increasingly spanning a widening pool of insurers, tech partners or providers, security – both within a business itself and throughout the supply chain – will need to be top of mind in the industry’s digital future. 

This will be an ongoing challenge. Recent research into insurance industry cybersecurity has found 38 percent of insurance IT decision-makers admit to their business having a cybersecurity skills gap and recent years have seen high-profile incidents of ransomware attacks and large-scale data thefts affecting operations in industries as broad as healthcare to oil & gas. 

The insurance industry will need to be at the very top of its game to identify and counter these fast-evolving threats – but there are reasons to be positive. Cybersecurity is very much on the radar of insurance business leaders – 70 percent list the issue as a top IT priority for 2022.

IT is out of its digital box

IT teams are on course to no longer be restricted to a siloed part of the business. Technology will be front and center in dealing with the pace of change and resolving looming challenges. 

In my experience with BGL Insurance, our technology teams have been indispensable in driving the shift to remote operations. Through our talented experts and carefully selected outside suppliers, BGL was able to shift its entire contact center operations remote in just eight days, eliminating disruption to in-house and customer-facing operations during the transition.

Not only has our leadership team been able to make quick and immediate changes to our operating model, BGL has used this increased agility and operational resilience to explore several new tech offerings:

• The accelerated use of digital voice, AI and natural 

language processing (NLP) in our contact centers – including working with Google Cloud and Twilio to deliver an NLP pilot from initial idea to working proof of concept in as little as four weeks.

• Becoming one the industry’s first providers to use machine learning to combat policy fraud – contributing to a reduction of over 70 percent.

• Prioritised customer self-service during the contactless pandemic period, allowing insurers to provide automated and personalized services to their policyholders.

Technology is only the starting point – we must build for continued operational agility and resilience

From my position as a CIO, there are three key ingredients for insurers, tech providers and suppliers to gain a strong foothold and set a platform for continued improvement in an increasingly digitized sector:

• Attract and retain the right people – ensure you have the tech skills in place to match business priorities now and into the future.

• Instill the right engineering practices – promote an IT ethos that helps define problems, develop models, analyze data and design solutions.

• Build and sustain the right culture – the above ingredients are not achievable without a strong company culture to attract tech talent and a collective desire to use technology to drive a business, its people and its customers forward.

But, none of this is possible without a talented tech team, trusted partners and an API and services-enabled IT architecture.

It’s exactly this type of collaboration that will shape success for insurers, their partners and suppliers in the years to come, ensuring we’re suitably agile to tackle emerging industry challenges head on.

Deloitte agrees in its research, noting that “insurers will need to adopt an ecosystem approach that involves partnerships and outsourcing, as well as in‑house teams. It will take a lot of effort to transition from a legacy position to flexible, open architecture.” 

Stay agile to seamlessly shift digital priorities

Following an intensive digital transformation period that has undoubtedly provided ongoing business benefits, business leaders stand at a crossroads. They can either sit back and reap the rewards of recent digitalization efforts, or continue to develop an IT-led, problem-solving culture to continually refine and improve business processes.

Working to further mature this digital ecosystem will help insurers maintain that increasingly vital level of first-class customer service, while also meeting the two-pronged challenges of tighter regulation and cyber threats.

But remember, technology is not a ‘silver bullet’ for all business issues – people, processes and culture are all critical for sustained digital success.

Steve Woodford, CIO, BGL Insurance

Steve Woodford is CIO at BGL Insurance, Steve’s responsibilities include all aspects of technology, business continuity, information security, data platforms and AI/Machine Learning. Steve also joined the Board of NHS Digital as a Non-Executive Director in March 2021.