Transforming Legacy Technology & Mindsets in Insurance: Key Learnings from The Insurance Network briefing Event
May 5, 2022 | Industry trends
Stefan Hull Director of Advisory
On a cold February morning, senior executives from leading insurers came together to talk frankly about the changing digital landscape and its impact on the insurance industry. In the iconic setting of The Gherkin, the City of London served as the ideal backdrop for a discussion about rapid transformation, innovation and how to deliver real impact for insurance customers today.
Insurance organisations, like most businesses, have faced rapid digitalisation. Two years on from the onset of the COVID-19 pandemic, the meeting of The Insurance Network (TIN) to discuss transformation of legacy technology and mindsets could not have been more timely.
And the key takeaway?
You can’t focus purely on modernisation initiatives. You need to transform and modernise in order to create a digital business that delivers on customer expectations as is fit for the future.
How did we get here?
Insurers have always needed a solid technology backbone. They invested in the best tech. And it worked. Really well in fact. But then consumer demand started to shift and pricing pressures on insurers meant less money to invest in technology innovation. After all, it was doing the job. So why invest in anything more?
It’s an important point – and one that kept coming back up through the discussion. Some of that “legacy” technology still serves its purpose. For example, mainframe technology isn’t the problem per se. But organisations haven’t had the drive from the business and investment to allow them build on and modernise it.
In some cases, however, the technology is legacy in the sense that it is not fit for purpose any longer. But change costs a lot of money. And who is to say that in another 10 years any new investment won’t also be ‘legacy’.
Insurance is still a risk-averse industry, and that speaks to its internal investments as much as to the way it manages its products.
Drivers for change
The discussion amongst the senior insurance leaders focused on the core drivers for change in insurance. Over recent years the tables have turned, and customer experience has accelerated with digitisation. This in turn has meant that digital capabilities in an insurer have become increasingly important as competition and pricing pressures have increased.
Yet recent research we undertook showed that 53% of consumers do not agree that their insurer is advanced in its use of technology, and less than half (46%) believe that their insurance provider has harnessed technology in a way that improves their experience as a customer
Insurance, across the board, can be a complicated purchase. But we live in an age of simplification and demand for a straightforward experience. With so much regulation, a plethora of data sources and numerous comparison points at stake for every customer and touchpoint, there is a clear case for technology to manage and simplify processes.
Customers demand a quick, easy-to-buy product from insurers. Or they risk shopping elsewhere, being underinsured, or even worse, uninsured. Our research also revealed that almost two thirds (64%) of consumers would like their insurer to offer more self-service options on their website in the future. Similarly, over two thirds (69%) would like their insurer to use app technology more in the future.
Data came up time and again in the discussion. With so much information required at all stages of the business process, legacy technology has to some extent become a gatekeeper. If you want to modernise, the challenge of extracting everything from legacy data applications can be an eye-watering prospect. But it needn’t be.
The real issue with data is that it is often in siloes within the business. Centralising that data, even out of legacy systems, is a crucial first step. Organisations can then build new applications around it which can work the data in new, faster and more relevant ways, improving everything from business operations to customer experience.
Rather than thinking about how much data a claim or application requires, agile technology could help insurers work to streamline processes. Instead of managing a plethora of data points, technology could identify the fewer, but more relevant data points for any given request, and achieve the best outcome for business and consumer.
Questions remain on how to navigate modernisation
The biggest obstacle to any modernisation is the organisational change required to make it happen and having the strategy to meet the vision of the business. Insurers need to balance the need to modernise and desire to transform against the challenges of people, technology and processes to get there.
How can new technology be assured to be future proof? How can you make that case to the people with the purchasing decision making power? Successful organisational change relies on strategic decision making to align technology investment with the current and future business vision in mind.
Processes have changed and will continue to change. The agility of technology to support faster and more accurate decision making is fundamental. Technology has to deliver against business outcomes and that has to be core to the planning process.
It’s important to bear in mind that those within insurance who are wedded to legacy technology are not against transformation. In fact, the opposite is true. They are acutely aware of the challenges of implementing new technology; the organisational transformation that is required and the need for an eye on the future.
Insurers are still seeking answers to questions – how do they move forward? What can they do to make sure they modernise and put customer experience at the core while respecting the job that legacy technology does? How do they transform to become a truly digital business?
The significant shift from business to customer-centric focus and the desire to deliver in a digital-first manner bodes well. One thing is for certain: change is happening and will continue to happen.
Companies that can innovate within the organisation to digitise for tomorrow’s insurance services will be the winners in customer retention and gain all-important competitive advantage.