Other parts of this series:
The role of digital technology in the insurance ecosystem is rapidly shifting, from being a driver of marginal efficiency to an enabler of fundamental innovation and disruption.
Digital transformation provides the insurance industry with unparalleled opportunities for value creation and capture; expanding profit pools; creating new revenue models; and enabling unprecedented access to global markets.
In January of 2016, the World Economic Forum, in collaboration with Accenture, released a report on the insights and recommendations discovered in the Digital Transformation of Industries (DTI) initiative. A key component of the DTI project has been the quantification of the value at stake for both business and society over the next decade from the digital transformation of six industries. The value-at-stake analysis suggests that the “combined value” – to society and industry – of digital transformation across industries is upwards of $100 trillion over the next ten years.
Yet, digitalization could produce benefits for society that equal, or even surpass, the value created for the insurance industry – the mass adoption of autonomous vehicles and usage-based car insurance, for instance, could save around 1 million lives by 2025.
The initiative also found that both customer expectations and technology are advancing at breakneck speed: The combinatorial effects of these technologies – mobile, cloud, artificial intelligence, sensors and analytics among others – are accelerating progress exponentially:
Insurance leaders have an important role to play – in collaboration with others – in tackling the complex task of ensuring that the value of digitalization to both society and industry is realized as fully as possible.
The DTI initiative report distilled the research and analysis down to a handful of key recommendations in three areas for leaders addressing digital transformation to consider and act on.
Governance and license to operate:
- Create a digitally literate supervisory and executive board that is multigenerational, diverse and with sufficient expertise to advise on fast-moving business and technology topics.
- Make sure to tie a value multiple of the societal benefits arising from your digital insurance activities to the economic benefits and communicate this with external stakeholders.
Business and operating models:
- Leverage existing capabilities and make big bets in new and innovative digital insurance models. Create a sufficiently ambitious risk-reward profile to achieve top-quartile performance.
- Make digital central to corporate strategy and use data for real-time decision-making. Work with insurance industry clusters to create interoperability standards that address unmet customer needs.
- Create a platform business model strategy that is consistent with your role in the insurance industry. Extend, maintain or change your role and consider creating a platform versus “plugging in” to others.
Talent and leadership:
- Address both technical (e.g. data scientists) and creative (e.g. design thinking) digital skills in your talent strategy. Recruit the best talent and skills, flattening organizational hierarchies.
- As a CEO, frequently embed digital into your online and offline interactions with employees. Have employees rate your effectiveness, and create an action plan to address dissatisfaction. Remedy it in an open and transparent way.
The importance of realizing the combined value of digital transformation cannot be overstated, given digitalization’s central role in tackling many of the challenges we face today. It is up to leaders in insurance to maximize the values at stake.
Learn more by reading the full report: