Insurance’s digital transformation must be human-centric

By William Girling
A recent article from BCG has emphasised the importance of not losing contact with insurance’s human element as technology transforms the industry...

Fundamentally, reasons BCG, CEOs of the future will manage businesses that only partially resemble their current incarnation. Among the changes that increased automation could bring are:

  • 30% fewer employees (with 20% fewer in claims and central functions, like HR)
  • 50% more people in ‘high-value’ roles such as data analytics
  • 70% increase in ‘digital-centric’ roles

Much like today’s aphorism that insurtechs are ‘tech first, insurance second’ entities, incumbent insurers may find that they, too, will need to update their business model.

Yet, whenever the subject of digital transformation is raised, the question remains: to what degree will human workers figure into the plan? BCG has a clear answer: significantly. 

The need to upskill insurance

As we found in our article ‘Automating claims settlement: Meeting customer expectations’, insurers are all too aware of the benefits that digital technology can bring to efficiency. However, BCG believes that this relatively recent recognition has been to the detriment of human capital.

“When management teams consider the implications of new bionic business models that marry humans and technology more closely than ever before, they tend to focus on the delivery and technology aspects. Too often they overlook the human changes, which are the hardest part,” said BCG.

Indeed; in a study conducted in 2020, the company found that employees and managers at firms in the US, Europe and Asia consistently ranked “training and recruitment of new skill profiles” among their least successful endeavours. 

Therefore, BCG advocates for a more human-centric approach; insurance companies should aim to become ‘bionic insurers’.

The rise of bionic insurers

The distinctive characteristics of a bionic insurer are a “robust balance” between human workers and technology, achieved by harmonising six leadership goals:

  1. Refocusing business organisation around customer delivery instead of products and services.
  2. Cross-team alignment and autonomy to refocus workloads, address core KPIs, and increase transparency.
  3. Adopt a ‘lean and agile’ philosophy and tech infrastructure.
  4. Focus on upskilling existing employees as well as developing new talent.
  5. Make sure to tailor transformation plans around particular needs, as opposed to taking an unfocused ‘off the peg’ approach.
  6. Senior management must embody the change it wishes to see.

“Leaders must prove from the start—and continue to demonstrate—that they have embraced the programme and believe it can generate value in the form of premium growth, cost reduction, or rising customer satisfaction as well as adaptability and resilience,” concludes BCG.

“In the long term, successful transformations set companies up for sustained success by propelling them strategically toward a bionic future.”

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