The Effectiveness of Digital Transformation: Forrester

The insurance industry is undergoing a significant digital transformation, driven by the need to improve customer experience (CX), operational efficiency, and competitive differentiation. According to a recent Forrester Consulting study, commissioned by EdgeVerve, insurers are leveraging connectivity, automation, and artificial intelligence (AI) to achieve meaningful change. 

Forrester conducted an online survey with 104 business and IT decision-makers from insurance firms who are responsible for their business, IT, supply chain, and process automation strategy to explore this topic.

Key Findings

• Transformation Challenges: For insurers, increased spending on digital transformation does not necessarily lead to success. Over half of the surveyed decision-makers (53%) reported that their organisation's transformation efforts have not been very successful in achieving desired business outcomes. Challenges include change resistance, data issues, knowledge gaps, and a lack of strategic direction, leading to poor customer experience (CX), operational inefficiencies, and inhibited competitive differentiation.

• Advanced Insurers' Success: Advanced insurers are more skilled at leveraging digital and AI to drive growth. The 26 advanced insurers surveyed are 1.6 times more likely to agree that their transformation efforts have been very successful. Their success is attributed to a slightly more aggressive adoption of AI, enabling them to generate efficiencies and deliver customer outcomes at scale.

• Platform-Based Strategy: A platform-based strategy enhances insurers' connectivity, digital, and AI capabilities. Insurers are more likely than firms in other verticals (68% vs. 60%) to use a platform operating mode approach to connect systems within their organisation. Platforms facilitate transformation through cocreation, risk sharing, and innovation, resulting in unparalleled business value.

Top Digital Transformation Use Cases for Insurers

• Driving Seamless Operations through Straight-Through-Processing (77%) Insurers are focusing on streamlining operations to create seamless processes that minimise manual intervention. Straight-through-processing (STP) helps reduce errors, speed up transactions, and improve overall efficiency.
• Accelerating Claims-Handling by Automating Document Processing and Claims Workflows (76%) Automation in claims handling not only speeds up the process but also enhances accuracy. This transformation reduces the burden on employees and improves the customer experience by delivering faster resolutions.
• Streamlining Insurance Operations and Improving Productivity by Automating Repetitive Processes (70%) By automating mundane and repetitive tasks, insurers can free up their workforce to focus on more strategic activities. This improves productivity and allows for more agile operations.
• Building/Improving Operational Visibility across All Integrated Systems (68%) Operational visibility is crucial for insurers to monitor and manage their processes effectively. Enhancing visibility across integrated systems helps in better decision-making and operational control.
• Enhancing Underwriting by Improving Access to Internal and External Data Sources (68%) Access to a wider range of data sources enriches risk analysis and product development. Advanced data analytics and AI can help underwriters make more informed decisions, reducing risk and improving profitability.
• Building/Improving a Complete View of the Customer across Channels (64%) A holistic view of the customer allows insurers to personalise interactions and provide tailored services. This customer-centric approach is essential for improving satisfaction and retention rates.
• Building Data or Insights on Products and Services to Take to Market (63%) Leveraging data to gain insights on products and services enables insurers to innovate and bring new offerings to the market faster. This agility is key to staying competitive in a rapidly changing landscape.

Strategic Recommendations

Insurers must align their transformation roadmaps with their tech strategies. This means that every digital investment should be strategically planned with a clear focus on meeting business needs and prioritising customer-centric objectives. Comprehensive planning ensures that digital initiatives are not just disparate projects but integrated efforts that drive meaningful change.

A crucial aspect of this alignment is building connectivity that fosters a customer-centric approach to technology. Effective digital leaders recognise the importance of synchronising business and IT priorities early in the transformation process. By doing so, they ensure that the tools and systems implemented are designed to create a cohesive and connected enterprise, facilitating seamless operations and enhanced customer experiences.

Prioritising accountable AI and automation is another key recommendation. Insurers that focus on these technologies can deliver personalised customer experiences on a large scale. AI and automation should be deployed with well-defined use cases that clearly enhance both customer and employee outcomes. This targeted approach ensures that these technologies are used effectively and contribute to the overall goals of the organisation.

Embracing emerging technologies, such as generative AI (GenAI), is also essential for insurers aiming to stay ahead. It is important to define clear use cases and strategic priorities for these technologies to ensure they are integrated effectively into business processes. This strategic adoption of new tech capabilities can drive innovation and offer competitive advantages in the market.

Finally, optimising partner ecosystems is crucial for driving innovation and efficiency. The complexity of partner networks can often impede progress, but by leveraging platform strategies that provide visibility and accountability, insurers can better manage these relationships. This approach not only enhances operational efficiency but also encourages co-creation and shared risk, ultimately leading to greater innovation and better business outcomes.

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