How insurers can create business value from digitalization
We all know why insurance should be digitalizing. Customers are increasingly using a multiplicity of channels to choose, buy and communicate about products and services—and they want a consistent experience across them all. New competitors like aggregators, original equipment manufacturers, telcos and online giants like Google are entering insurance markets.
A first step to compete successfully in such a business environment is to digitize existing processes to make them more effective, and then take the transformation much deeper to take full advantage of the potential of digital technologies for enabling totally new types of business and operating models.
That’s the theory. In practice, all of this requires considerable investment, both of time/ focus and money, and incurs a certain amount of risk. Of course, one can argue that not beginning this journey itself constitutes a risk, but it’s a long-term one, whereas digitizing an existing process and even changing the operating model are much more near-term.
The reality is that for the digital leaders (usually the CIO, chief data officer or CMO) to make the business case for digital transformation to his or her colleagues in the C-suite—and ultimately to the board—it’s vital to understand what impact to the bottom line may be expected.
In short, “better positioned to compete” and “a customer-centric approach” will only get one so far! But, very often, digital leaders lack the vital figures to be able to assess each element of digital transformation in terms of its potential contribution to the bottom line.
In order to help insurers bridge this gap, Accenture’s insurance team in Europe has made a focused effort to identify the actual value levers (see diagram below) that digital transformation can activate, both on the revenue and cost sides. We then assigned values to each of these levers. The outcome of this analysis is very clear: digital transformation can help insurers generate considerable value—and even double their profits.
Next time, let’s explore some of our research findings as we try to put a value on digital transformation.
The methodology we used is fully explained in our upcoming paper, Double the profits: How insurers can create business value from digital transformation.
For more on the case for digital transformation, read the Accenture 2013 Consumer-Driven Innovation Survey. You might also find Four capabilities insurers need on the journey to digital mastery and high performance useful background reading.