"Digital transformation requires that executives, managers, and frontline employees work together to rethink how every aspect of the business should operate". 

HBR May-June magazine 2022

Indeed they should know why transformation is important before the how. Insurers, brokers, MGAs are all urged to digitally transform as customers demand the same frictionless buying, upgrading and renewing experiences as they enjoy with onlime shopping from Amazon to Walmart, American Airlines to Whizz. 

Even though insurance is far more complex than buying flight, groceries or gadgets. Regulation, coverage, exclusions, claims for lines of business ranging from aviation to zoos and simole gadget insurance to complicated cyber.

Neverthess, the ability to buy, renew, make mid-term adjustments, register and manage claims are all being transformed by niche full-stack insurers that saw gaps in the market, innovated with great products and services, and technology stacks that enabled them to move fast and constantly iterate and improve.

Take ManyPets- formerly BoughtbyMany. In the UK Altus publish Digital Maturity Surveys that measure this across 19 attributes. ManyPets founders focussed on pet insurance and get the highest rankings of all insurers.

Note how its not just buying and rebnewing insurance but also making and tracking a claim. 

Compare that with gorilla in the market PetPlan

It does not mean that PetPlan offers a poor product or service but it is undeniable that pet pwners want the option of managing as much as they can online and always have access to a vet and/or a claims handler when thgey want extra reassurance. Mind you, if they are constantly kept up tp date with progress then they need reassurance less. 

It does not mean that a traditional company cannot deliver good online experiences. When it comes to gadget insurance that stalwart of the British highstreet The Post Office scores highest in digital maturity.

That's even better newcomers to the market like so-sure

Incumbent insurers can deliver best of class digital maturity like Aviva and AXA 

AXA Motor Insurance


Even so, you can see there are many gaps to fill- the orange and red boxes.

Incumbent insurers are constrained by core systems that are complex, inflexible and costly to upgrade not to mention the multiplicity of systems and technology stacks across the enterprise. Unfortunately for them the new competitors focussed on market  niches and unencumbered with legacy technologies are powering ahead like those below.

In the current HBR Magazine ( link below) Satya Nadella Chairman and CEO of Microsoft and Marco Iansiti Professor Harvard Business School discuss giving the entire enterprise workforce the capacity to become innovators. It's a big challenge requiring synergy in three key areas.

The Elements of Tech Intensity

To enable transformation, companies must create synergy in three key areas:

1. Capabilities

  • Organizational culture
  • Training and development
  • Low-code/no-code tools
  • Agile teams
  • Organizational architecture
  • Citizen developers
  • Product management

2. Technology

  • Machine learning
  • Deep learning
  • DevOps pipelines
  • Data encryption
  • Real-time analytics

3. Architecture

  • Data platform
  • Horizontal integration and normalization
  • Data documentation
  • API strategy
  • Experimentation and risk
  • Data governance

That's why digital transformation takes time and maybe explains the paradox facing innovators in the insurance industry from Geoffrey Moore author of the iconic book for start-ups titled “Crossing the Chasm”. Many Insurtechs will fall into the chasm so wise to bear that in mind when choosing technology partners. Mind you, both Tesla and Amazon were start-ups once.

 Digital Transformation Paradox. 

"The paradox is simple to state, involving as it does two seemingly contradictory statements:

  • You cannot digitally transform your enterprise without software.
  • Software cannot digitally transform your enterprise.

Everybody gets the first one, but a whole lot of people have missed the second. Why? Why would we ever think that simply by installing new software our enterprise would be transformed?

The answer is interesting. For the first two decades of widescale deployment of enterprise software, we did get what appeared to be transformative returns simply by installing new software. But here’s the thing. The returns came from automation, not transformation.

That is, if all you are doing is automating an existing process, then software alone can do the trick. Robotic Process Automation (RPA) is a good current example. Buy some UIPath or BluePrism, target some bit of workflow, engage an expert in that process to help, and zip, bang, boom—the process can run by itself! Now, if it is a complicated process, you will need a more robust tool for this, so you might buy some WorkFusion software to take that on. The point is, in neither case are you transforming anything. You are just automating it."

Geoffrey Moore

Most innovation deployed by insurers has been a case of automation.

Digital transformation has a much bigger brief.

 Because of the new digital economy, because of changing customer expectations, because of aggressive competitors coming at you with advanced technologies in tow, you have seen you are going to adapt, and fast. Specifically, you must change the way you operate, decommissioning the old methods to implement the new ones.

To begin that journey, you need to build clear representations of your current state and your desired future state. Capturing your current state involves an act of description.

Capturing your desired future state requires an act of design. If you do not have a clear design for your future state, you have no north star by which to navigate your digital transformation, and it cannot possibly succeed.

So, let us assume we have a clear design for our desired future state. It won’t take you long to realize there is little chance that a single intervention can get you from here to there. So, the next major deliverable must be a roadmap organized around a maturity model. What Moore describes as a stairway to heaven. Each step up the stairway should be designed to deliver value upon completion, thereby allowing the organization to pace its change management, funding things as it goes, building its confidence, and reassuring its various stakeholders. 

With such a roadmap in place, now you have a current-state/future-state accountability mechanism that can govern each stage of the transformation—the software and systems, the systems integrators, the process owners insider your enterprise, and the people responsible for executing the processes. As we have noted elsewhere, digital transformation is not a restaurant. You cannot simply pay for it and have it delivered to your table. It is a gymnasium. You still must pay for it, but to get any value out, you have to actually do the transformational work yourself. Transformational software, in other words, is like a Peloton—it’s cool, but only if you engage.

HBR visualises digital maturity by industry wuth financial services in a "Hub Model".

 Given that banking is recognised to be lrading insurance in digital transformation it putsmany isnurers straddling the traditional and bridge models below.

Certainly claims is often a standalone business operation, and within claims the number od systems silos can be staggering. One system for auto claims, one for home amd as for pet! Then there is a latge percentage of data on mainframes and AS400s, core systems of record and all sorts of point solutions that have ben trialled e.g. vehicle damage estimation like Tractable.

You often see statements like "Our no-code platform lets you deploy digital transformation in weeks" suggesting that transformation in this new age is quick and easy. Yes, in an emergency you can deploy eNOL/FNOL in weeks, and even extend that out to claims validation, triuage and orchestration in a few months. BUt come back to the HBR article to get claims integrated technically and socially actoss he enterprise takes time.

It is of little value automating current processes; transformation requires looking at that future state in 2030. 

  • Will you focus on partnersing with vehocle OEMs to embed insurance at point ofd sale-lease-hire? Motor insurance will change significantly over this decade.
  • Will you ensure all policy holders get the same frictionless and delightful UX and journeys across all lines of business or major on home, healthcare, cyber?
  • Will youi join up all the customer and vehcle touchpoints to be better than Tesla at underwriting Tesla drivers and making claims more of a dream than a nightmare?
  • Will you compete strongly with the niche insurers that add services around their insurance products like ManyPets buying a regulated comoany to be able to deliver pet medicatio  to the insured's home

So many questions so much technology.

Once solution providers trie to build everything themselves. Guidewire, Duck Creek, Majesco, Sapiens, ICE offer much more than just systems of record. CoreLogic and Verisk much more than just claims. Thyey offer cloud deployments but sre still crowding on-prem solutions into a cloud deployment.

A new range of vendors designed platfiorms from the cloud-native bottom upwards, using micro-services, a richness of APIs that actually work, no-code tools to iterate and improve and just one version of software deployed meaning that upgrades become a thing of the past.

RightIndem redesigned itself as an eNOL/FNOL, automated routing of claims and orchestration digital claims platform that viably let's insurers and brokers add best-of-breed and proven software like Tractable, Solera, Friss & Shift, SLVRCLD, Mastercard and Imburse so that data flows securely and in real-time between the component jigsaws of the complete platform. It lends itself to the "stairway to heaven" innovation process Geoffrey Moore describes above. 

Genasys and EIS have done exactly the same for core technology platforms.

It makes it easier but does not take away the need to carefully plan, prioritise, strategize, organise and direct people, get buy-in and encourage an innovative and iterative organisation that can fail fast and often whilst in  the long term learning  and achieving strategic success over tactical failure.