Making Sense of the Insurance Industry's Resistance to Going Digital
The insurance industry is late to the game. Digital initiatives are now the dominant business paradigm. By today’s standards if you aren’t doing digital transformation, then you are near the bottom of the learning curve. That’s where you can find most insurance companies—and they are steadily falling further behind.
New technology recently entered the market that sped up the pace of digital transformation: from machine learning and sensors, to virtual reality, autonomous cars, big data analytics and digital collaboration tools. These innovations didn’t just change business; they change the nature of risk and liability.
Everyday activities such as driving all the way to complex activities such as supply chain logistics demand a nuanced approach to filing claims, assessing risk and liability, settling disputes, and pricing out policies based on real-time data and analysis. But that hasn’t really happened. Why haven’t insurance companies kept up?
Insurance Lives in the Past
There are a number of ways to explain why insurance companies are still largely operating with traditional policies, business structures, workforce culture, technology, procedures, and distribution models and systems.
According to a survey of 100 insurance companies conducted by Ernst & Young, 79% of insurance companies are “still learning” about digital initiatives; around 57% of insurance companies “have operating models that do not facilitate digital”; and, of the insurance companies surveyed, 89% “do not consider past interactions when recommending products or services to online customers.”
Lastly, approximately 80% of respondents do not see themselves as “digital leaders” and are “trailing the spectrum in customer engagement, analytics and adoption of mobile and social media.”
Insurance companies cite many of the same impediments to digital transformation I’ve heard from C-suite executives at conferences on the topic.
Those run the gamut of ideological obstacles (“people will forever need insurance”) to technological ones (“legacy systems stifle innovation”), in addition to talent, generational, and system lock-in issues. In a fe