Recently, during Novarica’s 11th annual
Digital strategy
Many discussion participants expressed interest in understanding the digital space and digital strategy. Digital transformation is becoming more important for those in the insurance industry as consumers bring their expectations, set by other industries, to the insurance marketplace. CIOs are looking towards partnering with third parties and API usage to further their digital capabilities. The importance is in being “aware of the customer journey,” and how the value is in the prioritization of capabilities. The best way to build an effective digital strategy, is to start by identifying a list of key basic capabilities and then identifying the alternative ways that those capabilities can be delivered. It is critical to engage both marketing and insurance operations to prioritize both the capabilities and the projects within each category. IT must provide leadership in evaluating how those capabilities will be delivered to manage security, technology risks, and total cost of ownership.
Telematics
As with all emerging technology, it can sometimes be unclear as to when carriers should jump in, and how they can differentiate themselves in the market. Telematics, though long leveraged in personal lines, is no different. For many, the question is “whether you have to be in the market.” When it comes to telematics, insurers may be holding back due to concerns over the perceived cost, a lack of technology skillset, or potential changes in personal auto risks. Insurers will eventually find themselves pressured, by competitive factors, into investing in a telematics or usage-based auto insurance program. Telematics vendors now can even enable small companies to implement cost-effectively. The technology and data keep moving as carriers are using AI applied to video to analyze things like head movement and hand placement to evaluate driver risk, in addition to telematics data on braking, acceleration, and driving speeds.
Managing core systems investments for the future
The challenges surrounding modernizing core systems are not new for personal lines insurers, and participants spoke about best practices to successfully transform their systems. In addition to choosing the correct vendor partner and system integrator, it is also crucial to understand that the organizational change management piece is just as large as the technology piece. Core systems projects are investments that must have employee and executive engagement, along with collaboration between IT and the business units, to succeed in the future.
As one CIO noted, it is important to “prioritize the tech debt you have built up” to properly identify the risks and be able to mitigate them once an initiative is started. Choosing when to introduce a major release or upgrade into a large transformation project is one of the most difficult decisions a CIO must make, balancing risks with a need to deliver new capabilities. Building muscle memory by taking smaller releases more frequently was discussed as a best practice.
For more information on trends in personal lines, see our recent report on
This blog entry has been reprinted with permission
