Is this the perfect time for change in the insurance market? Across the Atlantic Ocean, Professor Terence Tse believes it is. In a fascinating article, he promotes Digital Transformation as the key to revival after the pandemic. The Professor contends, “Thus, in the post-pandemic marketplace, any businesses intending to operate in the “business-as-usual” fashion will have a higher chance of slipping behind, watching their technology-driven rivals pushing ahead and thriving.”
This article reminded me of news much nearer to home. When Amanda Blanc stepped into the CEO role at Aviva, she flagged radical action. Blanc has indicated that nothing is off the table for Aviva at this point. Indeed, her approach has an echo of the words from Professor Tse. Namely, “One of the points I would make is I am not a business as usual person and I have not come here to do a business as usual job.”
So why change?
Over the past decade, the volume players in the insurance market have broadly been chugging along without major change. They have certainly made ‘tweaks’ here and there. Tier-1 Insurers have also acknowledged the creative solutions being developed by various insurtech companies and there have been many examples of productive collaboration. However, to date there has been little sign of the radical action hinted at by Amanda Blanc.
So why change now? Well, the COVID-19 crisis has highlighted a long list of issues for many in the insurance market. As a result, this may indeed be a perfect time for change. In fact, not only may this be a perfect time to change, for many it may be an essential time to change. A few of the most pressing challenges have been:
- Systems do not readily support staff ‘working from home’.
- Technology is not designed for the changes needed to offer appropriate solutions for this changing world. Even small amendments can sometimes involve expensive development.
- Changes cannot be made quickly enough to meet the new demands.
- Claims processes have not been able to cope with the volumes and queries driven by the coronavirus crisis.
And these are probably the tip of the ice-berg. The current pandemic has forced us all to think differently. However, change is seldom easy, especially in the risk averse insurance market.
Challenges to change
There are many reasons why the main players in the insurance market have, broadly speaking, avoided radical change. Historically, the main challenge however has been the lack of internal appetite. Those at the top of any Organisation must be the driver for change. The recent developments at Aviva demonstrate a belief that appointing the right leader is the essential first step for success.
Arguably, the biggest challenge to change is getting the right company culture and structure in place. The difference now is that the issues thrown up by the current pandemic have served as a warning. The insurance landscape has changed and market leaders have been forced to accept they need to offer different solutions, both to staff and customers alike.
Once the leaders are really ready to embrace the need to change, they will then be able to work on other challenges such as:
- Having the right Organisational Structure in place
- Designing the right business processes
- Having the right products
- Embedding a culture of constant review and improvement to keep up with an ever-changing environment
- And last, but by no means least, having the right insurance technology to deliver all of the above
All these around the fundamental challenge of really understanding the needs and aspirations of customers.
The benefits of change
The current crisis has forced us to stand back and look at issues from a fresh perspective. This process should lead to more cost effective and process efficient solutions that are focused on customer needs.
Some may be caught in the ‘legacy trap’ – with a reluctance to spend more good money on an old problem. Maybe this is the time to start again. Not only may the existing system be inefficient, but it may mean ‘understanding your customer’ is nigh on impossible.
In the end, the only benefit of change that really matters is the benefit it brings to your customers and staff alike. Customers have high expectations and will vote with their business. Good staff will look for pastures new.
Statistics abound with proof of the growing reliance on the internet. Indeed the Internet Trends 2020 supplied by VPN Mentor contains some staggering statistics. People expect digital solutions from their Insurers as well as in the work-place. If the current pandemic has taught us anything about the insurance industry, it is that it is capable of adapting to a volatile world. That alone could make this the perfect time for change in the insurance market.
Content has been prepared exclusively by Total Systems plc, a specialist provider of insurance systems developed for the digital insurance age.
