Why insurance board members play an important role in the digital journey

In “What Makes Digital Leaders,” a survey conducted by the Economist Intelligence Unit and sponsored by DXC, the insurance industry ranks in the middle in terms of digitalizing major business functions. The survey revealed the not-so-surprising fact that IT is still largely treated as operational rather than strategic by many executives.

With that in mind, PwC and DXC decided to invite board members from Danish insurance companies together to discuss how IT becomes a strategic board topic. Eighteen board members representing 22 companies met for our vibrant discussion.

The inside-out approach doesn’t work anymore

We discussed the premise of the Outside-In business model, noting that the amount and pace of innovation happening outside the bounds of the traditional enterprise vastly outstrip that occurring within. Aggregators and price-runners have taken over the role of attracting new customers; data for underwriting has become real-time and draws from outside the organization; and clients would like to do more by themselves from a mobile device.

We see it every day in the dominance of consumer IT, the rise of open collaborative communities and, perhaps most powerfully, at the intersection of these two realms.

Value and innovation can still be created inside the firm. However, the balance is shifting, and most enterprises can no longer keep up. The legacy systems become a hindrance to digital opportunities.

If we accept that this shift is happening, the challenge becomes:

  • Channeling innovation for the benefit of end customers
  • Effectively connecting and leveraging those innovative ideas in the context of products and services
  • Blending the best of what we do today with all that is available from the outside

The world is getting (even) more complex

A few weeks ago, I discussed the practice of outsourcing business processes with a range of insurers. Many years ago, they outsourced with the clear purpose of running operations more cheaply. But if they could re-do this decision, they would like take a broader approach related to:

  • Growing digitally and transforming legacy IT
  • Transforming into a set-up that is more flexible to develop, when it comes to compliance, digital opportunities and speed to market

The one-to-one approach just wasn’t supporting the challenges they face today.

Our clear advice is to address the dual agenda by investing in new digital opportunities while transforming legacy systems, yet this approach isn’t being taken by enough insurers today.

A recent report from Celent shows that insurers are significantly investing in business intelligence, predictive analytics and mobile for agents/customers. But they invest less in their core solutions, such as policy administration systems (10% in progress with replacement, 90% maintain existing setup). By only investing in new digital opportunities, without transforming existing IT setup, they fail to achieve cost efficiency. They’re missing out on the cost savings that comes from transforming existing IT, resources that could be invested in the new digital business model.

Boards need to be involved

It’s clear that boards must be actively involved to set direction and participate actively in creating the digital vision. This is crucial for insurers to successfully change the business model for the digital age. This is a topic we plan to discuss more going forward.

Liselotte Munk Poulsen is Industry General Manager at DXC North and Central Europe Insurance business. With more than 20 years of experience from working with the Insurance industry, Liselotte holds a solid track record and has built a solid performing insurance software company with a substantial consultant business. Through a holistic end-to-end perspective of the global insurance Industry, Liselotte enables her knowledge to provide value to the European insurance industry.

On a daily basis, Liselotte drive DXC North and Central Europe Insurance business, leading a team with deep insight into P&C and L&P. The clear objective is to leverage global capabilities that for decades has been developed and utilized by more than 1,900 insurance companies worldwide into the European region.


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