Digital disruption has been rife in many industries – often catching established players unaware. Only with the benefit of hindsight are we able to pinpoint the turning point and appreciate how the new players changed the game. In the last few years, we have all come to know the stories of the “Ubers,” the “Amazons” and the “Spotifys” that turned their industries on their heads. Digital Insurance as a Service has the same potential to turn insurance upside down.
Digital Insurance as a Service is, basically, digital insurance – right out of the box. It is an integrated, end-to-end approach to insurance technology that leverages a partner to seamlessly bundle together industry-leading insurance applications, infrastructure and business process services into a single solution. It’s a consumption-based approach to digital insurance transformation, making it ideal for insurers adjusting to a more consumption-based market environment.
A new player in the market can use it to be “born digital” and instantaneously have all the processes in place to provide a digital experience to consumers. It offers speedy response times, customisable and agile processes, integrated technology and the ability to focus purely on customer needs – all that the customer wants and has come to expect. Additionally, these new players would have a greater ability to attract digital talent (talent the insurance industry will be fighting for in the coming years to stay relevant) and take advantage of the gold mine of available information digital brings.
The insurance industry, of course, does have barriers to entry. New players would need to get their financial license and meet their country’s regulations – giving traditional players time to get on the front foot. Australian insurers, in particular, need to be cognisant of these potential threats, as ASIC is known to be a pro-digital regulator, and there has been a five-fold increase in the number of fintechs in Australia since 2014.
Change is never easy, of course, and the people side of shifting to Digital Insurance as a Service will be particularly challenging. According to DXC Technology’s Leading Edge Forum, established organisations that are focused on increasing efficiency and reducing costs tend to attract “Town Planners” and “Settlers” – people who inherently love process, embrace scaled operations and are resistant to change. However, Digital Insurance as a Service will disrupt this. As manual processes are digitised, the speed of transactions and bringing products to market will accelerate. A new culture focused on experimentation, agility and ambiguity will need to be woven into the organisational fabric to allow these organisations to stay relevant as consumers’ digital lifestyles plough ahead. Insurers will need to attract “Pioneers” – people who enjoy these cultural aspects – while also focusing on adapting their current culture to ensure that they can retain this group, and not drive them to leave.
Traditional organisations would do well to sharpen their focus – spending the time to truly understand their customers and redesigning their business. During this redesign, it is also important for the organisation to re-examine their core – and ensure that this is truly what they want their organisation to be known for in its next phase of existence. Finally, the cultural shift needs to begin – as the journey towards becoming digital can be a long process, and there are many hearts and minds that will need to be won on the way.
Insurers who can see this change coming, and who move quickly, will be able to seize the high ground as the industry shifts. Those that fail to adapt may be left behind – only to lament what could have been.