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IT CLOUD SERVICE PROVIDERS TO PLAY AN IMPORTANT ROLE IN THE DEVELOPMENT OF DIGITAL INSURANCE.

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In the coming three to five years, all Insurance

companies have to implement the digital version of their

company. The definition of Digital Insurance will be

different for every company depending on target

markets, ambitions and capabilities. The customer will

mainly dictate the service and functionality requirements

and Insurance companies will have no choice to follow

and invest in an agile digital organization. A paradigm

shift is necessary to implement Digital Insurance, as the

internal Insurance organization in most cases will resist the necessary change. Strong

transformation leadership will be crucial in implementing a World Class Digital Insurer in the

fastest possible timeline.

Digital Insurance

Digital Insurance basically is to sell insurance products and provide insurance services fully

digitized anytime, anywhere and on any device. Sales and service functionality is available for

distribution and service partners and consumers are able to buy and renew insurance products

direct online or on mobile devices. Self-service portals and mobile apps are available for

customers and partners to change policies, pay additional purchased products and features,

notify the Insurance company of claims and enquire on products, services, transactions, policy

and claims status. Furthermore, Digital Insurance includes a full automation of all internal

processes including straight through processing, digital and social marketing, big data analytics,

rule-based underwriting and claims management and “bring your own device” for every

employee to work anywhere, anytime on any device. The internal organization will be

completely paperless and customers, distribution and service partners will mainly do entering of

data once and available in all processes anywhere and anytime.

Implementing the Digital Insurer affects all departments in the company. An integrated vision,

strategy and tactical plan are crucial to deliver the World Class Digital Insurer successfully.

Digital Insurance is not an online portal built on top of back end systems including all the

complex functionality and processes requested by the internal organization. Digital Insurance

includes rationalization of products, processes and IT, streamlining of internal processes,

simplification of products, underwriting and claims practices and redefining sales, marketing and

distribution.

Transformation

There are different ways to redefine and transform the Insurance Company into a Digital

Insurer. One method is to transform the organization based on the integrated strategy in a

traditional approach.

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IT CLOUD SERVICE PROVIDERS TO PLAY AN IMPORTANT ROLE IN THE DEVELOPMENT OF DIGITAL INSURANCE.

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This approach is complex and the risk of failure is high due to the following reasons:

- Transformation will be executed in parallel with running the day-to-day business, which

in many cases will result in continuous resources problems for the transformation

projects.

- The same people that created the current business and operating model will define

transformation for a large part. They will have difficulties to redefine the organization to a

World Class Digital Insurer.

- Internal management and staff are not aware of all available technology and will not be

able to bring all components together into a fully digitized organization.

- A big reorganization will create resistance as it will change the way of doing business,

way of working and will redefine the organization structure including positions and job

descriptions.

- Full time strong leadership to ensure employee engagement, quality of proposed

solutions and timely decision-making is necessary. This will clash with other priorities

like short term financial targets.

The first method will be the preferred method for Insurance companies. Another method is to

define the digital world-class organization out-of-the-box based on the principles and standards

of the Insurance industry, the current and expected changes in the Insurance business and

different market maturity and practices. A World Class Digital Operating Model defines the

business and IT environment, able to be implemented in any Insurance organization. This

second method will be the preferred method for external IT and service providers and is based

on the best possible digital operating model for Insurance.

Assuming that both methods aim for the same quality end result, the risk of the first method is a

long timeline and delays due to all kinds of problems and mistakes, too many compromises in

the implementation, high cost, change-weariness and finally losing the competiveness where

competitors are able to change better and faster. The second method is based on a “greenfield”

implementation without the internal transformation difficulties during the design, development

and deployment.

The cloud solution for Digital Insurance

IT service providers are able to play an important role to help the Insurance industry to change

faster to a Digital Insurer. With the necessary excellent knowledge of Insurance business,

products, processes and IT, an IT service provider will be able to implement a full Insurance

cloud solution that works in principle for every Insurance company in the world. The critical

success factor is a cloud Insurance service platform able to handle complex products and

processes due to market practices and different digital ergonomics depending on the country

and organization.

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IT CLOUD SERVICE PROVIDERS TO PLAY AN IMPORTANT ROLE IN THE DEVELOPMENT OF DIGITAL INSURANCE.

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From a technology perspective, all IT components are available. Cloud computing in terms of

infrastructure and platforms are available, robust and used by many companies in the world. A

world-class Insurance platform provided as a service is not available yet. The first IT service

provider able to deliver a World Class Digital Insurance Platform fast will create a big

competitive edge in the market and Insurance companies using this platform will be able to

create a completive edge in their business as well.

For every business component, many good IT solutions are available. The initial challenges are

the definition and implementation of a World Class Insurance Software suite as a service,

including:

1. Comprehensive product models able to handle multiple product features on different

levels and complex pricing algorithms.

2. Robust process models able to handle different underwriting, claims, market and

organization practices on different levels (global, regional, country, department).

3. Integration between all back end IT components, online and mobile applications,

gateways to service providers and distribution partners.

4. An agile platform providing self-service change management (products, processes) to

business experts of Insurance companies.

5. Availability of social media integration and big data analytics, integrated with sales &

marketing data and tools.

6. Change management and quality service organization responsible for fast development

of change requests, releases and support of the Insurance organization.

Win-Win solution

The second challenge will be to convince the Insurance companies to outsource their business

to an Insurance IT cloud service provider. A major outsourcing always creates resistance in an

organization, the same as a transformational reorganization. However, Insurance companies

do not have the luxury of time, resources or budget.

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IT CLOUD SERVICE PROVIDERS TO PLAY AN IMPORTANT ROLE IN THE DEVELOPMENT OF DIGITAL INSURANCE.

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A full Digital Insurance Solution including the social media integration, mobile apps, the promise

of fast configuration of products and processes and cheaper execution will be taken very

seriously by the top management of any Insurance Company.

The choice of an uncertain outcome of a big internal program or using an of the shelf flexible

solution reducing the operational cost immediately is no-brainer. The cloud solution has to

include a comprehensive implementation plan ensuring a smooth migration, which takes into

account the status of the Insurance organization, strategic priorities, market & distribution

practices, integration with partners, etc.

Multiple implementation scenarios of the Digital Insurance Cloud Solution have to be available

to facilitate the decision making process and addressing the concerns of Insurance

organizations.

The provider has to be prepared to work intensively together with the Insurance Company to

support business cases, proof of concepts, audits, due diligences, service level agreements and

contracts to help the Insurance Company to get local authority support, headquarter support to

decide on an outsourcing to the Digital Insurance Cloud Solution.

Developing a Digital Insurance Cloud Solution is a win-win situation for IT Service providers and

the Insurance industry where IT service providers focus on the Digital solution delivery and

future innovations and Insurance companies on Insurance business instead of a continuous

internal focus on IT delivery and projects to keep up with ongoing innovations.

IT Service Providers to play an important role in the development of Digital Insurance

TransInsure Consultancy

Paul de Bruijn

Singapore, July 19, 2013

First edition V1

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www.transinsure.net