Blog: Evolution, not revolution, is the way forward for insurtech

Ok, I’m going to say it: digital transformation isn’t working – or at least not how we thought it would. We need to be realistic, cut through the hype, and view this as it should be: digital evolution to reflect an ever-changing world to meet the end-customer’s needs.

Let’s start with the hype. “Digital transformation is the process by which companies embed technologies across their businesses to drive fundamental change”, says Accenture. It’s “change—driven by technology”, says Deloitte. “Technology is the business agenda”, adds EY.

While these definitions seem logical, they highlight where businesses are going wrong: instigating significant technological change without understanding why or what benefits this will bring to the back office or the end-customer. No wonder 70% of digital transformation projects fail to deliver on their promise.

So, how do we change this?

Scaling down

Firstly, we must recognise the value of ‘scaling down’ to match an organisation’s needs. Smaller insurance providers and brokers may find their technology doesn’t have the depth of functionality required in the medium term to grow and sustain a business. Meanwhile, larger companies often struggle because their transformation projects are too far-reaching and complex to succeed.

The real skill lies in starting small and building up. This doesn’t mean scaling down your ambition but rather developing your digital maturity at a pace that suits your business. It’s about targeting longevity with a well-defined foundation and room to build.

Setting a tight, achievable scope

Next, we need to make sure digital works smart for the organisation. Without an achievable scope, the danger is that technological change delivers no real benefits for a team or end-customer. Too often, the motivation comes from the hype around a new technology – whether AI, blockchain, robotics, or otherwise. People start looking for all the possible use cases it could be plugged into. It’s almost the technology looking for a problem.

Yet, implementing the tech is the simpler part; aligning objectives and outputs is the challenging part. Many insurance products sold today were designed years ago and are ripe for innovation. Transformation should start by surveying and challenging that existing offering, asking, “What does the end-customer want? How do we personalise it? How do we improve the supply chain?” – and then use technology to help facilitate this.

Understanding the broader impact of change

Finally, we must consider how change may unintentionally affect the broader ecosystem, weighing up the associated risk and reward.

When technology changes overnight, there’s little opportunity for you and your supply chain to catch up. Give an insurer the sudden ability to offer a daily rather than annual policy, and reinsurers are left scrambling because they don’t understand how to factor this into their own model. This is where most companies struggle – how to adapt coinsurer or reinsurer agreements or terms of contract.

Technology change has to be in sync with everyone in the supply chain. Well-considered, planned, incremental change that enables your digital maturity to evolve at a pace and style that works for your organisation will have a far more significant impact. When those changes are about creating better journeys for your individual customers, they can deliver true change.

Just as revolution begets risk, evolution begets survival. So, let’s forget about digital transformation: digital evolution is where the smart money goes.

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