As the impact of Covid-19 sweeps through the insurance sector I have spotted a noticeable change in thinking as the C-suite and senior management look to reprioritise and identify critical projects. So, I wanted to share a few observations that I think need to be considered when deciding on what is critical today but keeping one eye on the future.

Survival instinct is a natural response

The virus has caused a massive amount of disruption to individuals and organisations driving most of us into ‘survival’ mode. As a result, business leaders are now focussing on projects that deliver ‘in-year’ benefits. These are projects that will typically gain benefits from focusing on shorter term optimisation of costs, rather than positioning the business for longer-term success. Others in the industry are considering reducing head count and finding other ways to reduce costs without making material investment.

I guess ultimately and perhaps understandably when gripped with this survival instinct anything that achieves a greater and faster return or reduces costs will be prioritised. Yet, however valid these priorities might seem now, rejecting all strategic programmes in favour of these may not be the wisest response.  As this situation continues to unfold, the disruption caused will also breed opportunity and the motivation to pivot a business that may have not be in normal operating conditions. [CF1] In amongst the distress and inevitable difficulties that the pandemic will present the market, some things have changed for good and as we work through this situation, we will need to be both nimble, observant and considering how we can/will shape the “new normal”

A shift in customer demand; requires well thought out change

So, what do we need to consider? At this point it would be easy for me to wave the ‘digital transformation banner’, but that is not how we work at Charles Taylor InsureTech. We always explore any proposed changes and prioritisations based on our customers’ customer needs. And right now, there is a lot to think about.

We anticipate more than ever that consumers of insurance products will be looking for increased levels of digitisation of existing services. The push for digital transformation will be increasingly driven by consumer demand for new services and products. It will make it more challenging to simply lock down on cost reduction projects or those that deliver ‘in-year’ benefits[CF2]  (e.g. application rationalisation, sourcing/procurement and automation). So, we believe that the demand from consumers is likely to lead to a need for some transitionary projects. These projects will need to be both considerate to the fact that investment budgets will be constrained, but deliver enough business and technology change to position insurance businesses to be ready for a period of “digital evolution” over the coming 12 – 36 months.

The specifics of what needs to change in both personal and commercial lines will become apparent as we move forward beyond the pandemic and subsequent period of economic response and recovery. Although we can’t be totally sure what these changes will look like, the critical thing will be to observe, but also be bold in taking new ideas to market or at least testing some forward-thinking concepts to push the boundaries, explore and exploit new possibilities. Fortune favours the bold, is a fitting way to describe the current conditions and potential opportunities (or challenges) that will be presented to the Insurance market.

Making the impossible possible

Let’s not kid ourselves that the impact of the Covid-19 pandemic and increasing demand for digital business operations is something that cannot or will not apply to commercial lines too. The situation has already led to unprecedented change that should be leveraged. For example, in the Lloyds Market the previously impossible has become very possible and rapidly! Since the outbreak brokers and carriers have not been able to speak face-to-face, secure or seal deals with stamps, and have been forced to operate digitally. This has even led to the rapid introduction and adoption of digital trading practices using technology that was already available – highlighting that resistance to change rather than technological limitations has been what has been holding back segments of the market from greater digital enablement. This recognition of how people have adapted and adopted swiftly to new ways of working should not be wasted when it comes to decision making on future projects. Covid-19 has proven the ability for these lines to be written and serviced digitally. Now is the opportunity to look at what else can be learned from personal lines.

In the future different questions need to be asked

Moving forward I think there needs to be a new laser focus on what determines a critical project. We need to consider things differently and recognise that sometimes technology projects can be driven by trends such as blockchain, automation, chatbots and digital chatbots, rather than being driven by the opportunity to do things differently to improve the wealth or health of your business. In the present times it is possible to see which of these experimental projects have made a real difference now. For clarity, this is not to say that such technologies don’t have the potential to yield value in the insurance value chain, instead it is more to highlight the need to have complete focus on realising the potential of technology by investing in it to change your business for the better… rather than investing in projects that simply prove or endorse the potential of the technology. We need to start asking different questions of both our businesses and the technology that is used to operate the business. Is it moving us to where our customer needs us to be? How can we be more agile and able to adopt and adapt to new situations fast? How can we make our products and services more valuable to our customers and their customers? Can technology get me to my strategic objectives quicker or more cost effectively?

Ultimately, project motivations are now likely to come under more scrutiny. There will need to be a clearer articulation about how a project helps the business, otherwise scarce time, money and resources won’t be spent. A final thought, although the natural instinct might be to stop, contract, and survive; I think now is the time to reflect, reimagine, rethink, be brave and accelerate out front.

Author: Tom Maleczek