Insurers are increasingly creating value by using digital tools and technology in a number of innovative ways.
So says global research firm McKinsey & Company in The Making of a Digital Insurer, a 24-page report that reflects the path to enhanced profitability, lower costs and stronger customer loyalty for the insurers - if they embrace a digital transformation journey.
Why? To reap the full benefits of the digital era, insurers should aspire to become digital firms. Digital firms, according to McKinsey, leverage technologies such as mobile, social and cloud to make better decisions, automate processes, deepen their connection with customers, employees and intermediaries, and pursue profitable innovation - all at a rapid development pace.
Furthermore, the most successful digital firms across all industries are distinguished by the degree to which digital is integrated at all levels and functions of the enterprise. Digital informs everything from strategy and organizational structure to day-to-day operations and workplace culture, according to industry think tank McKinsey.
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Raising The Digital Bar
Today, the digital bar for insurers is high and rising, as McKinsey emphasizes. Those companies that can meet this challenge will build greater customer loyalty, cut costs and improve profitability. So, how do insurers embrace the digital journey? Based on work with carriers and research on the qualities that distinguish digital leaders across all industries, McKinsey has developed a perspective on how insurance management teams can set a course to attain digital excellence - boiling it down to what McKinsey refers to as six dimensions.
What are the six dimensions for digital transformation?
Strategy: A digital strategy adapts to rapid industry change while supporting overall business aspirations.
Customer-centricity: Digital tools improve the customer experience at every step in the decision journey, and beyond.
Digitizing Business Processes: Processes are reimagined from a zero base, reducing costs and errors, and boosting customer satisfaction.
Organization: The corporate culture, approach to talent and organizational model all support digital excellence.
Technology: Two-speed IT allows for rapid digital development and ensures that transactional systems are safely maintained.
Analytics & Decisionmaking: Data from both internal and external sources is gathered in real time and mined for actionable insights.
The McKinsey report suggests the optimal approach to digital transformation combines short-term steps with more measured, long-term projects. Today, insurers are already demonstrating the value that a digital approach can deliver through improved connectivity with clients and intermediaries, better decision-making, cost savings from automation, and as a springboard for business model innovation, as emphasized by McKinsey. The choice insurers face today; however, is whether to simply invest in digital capabilities ... or become digital insurers.