All Aboard for Modernisation: Next Stop Underwriting - Paper - Page 5
Introduction: Unique challenges
of transforming the Insurance
industry
The term Transformation has become so overused in insurance that it has
almost entered the realms of cliché.
Everything, from a new system implementation to the
addition of an app to the claims process, has been
held up as an example of digital transformation, but
more o昀琀en than not, what has actually taken place is
a tweak to an existing process, the digitisation of one
aspect of one process in one business unit. This starts
to explain why so many transformation programmes
in insurance have ultimately disappointed – both the
industry and its customers. This disappointment is not
unique to insurance with various surveys indicating
that 70-80% of digital transformation projects
fail2; nor is it unique to underwriting. Delivering
transformative change is far from easy and as we
argued in A playbook for transformational change:
“Change requires a broad set of resources, a team
that is committed to the principle of modernisation,
and skill in enacting change processes”3.
The absence of these fundamentals is only part
of the issue. Transformation programmes are
failing, that much is clear, but why that might be
is far less obvious.
Why is insurance still trying to transform?
Although de昀椀nitive 昀椀gures are hard to come by,
it is estimated that collectively, the UK insurance
sector has invested in excess of £15bn in digital
transformation programmes over the last ten years4.
Despite that huge level of investment, a recent survey
found that only 20% of companies achieved more
than 75% of the revenue gains they had anticipated.
Despite the expectation that digital transformation
would result in signi昀椀cant cost savings, only 17% of
businesses achieved more than 75% of expected
savings5.
The key question is why? Some argue that the
transformational approach simply hasn’t been given
enough time to bed in, but the Altus view is that
these projects can only take a business so far while
underlying process issues remain unaddressed.
The tried and tested methods aren’t working and so a
new track has to be laid, one that has modernisation
as its next stop. To truly deliver change, organisations
must focus upon modernising their operations
incrementally, taking one thoughtful step at a time,
in a process of ongoing continuous improvement.
2
https://www.forbes.com/sites/forbesbooksauthors/2023/12/11/success-in-digital-transformation-when-to-call-time-out/
https://www.altus.co.uk/insights/a-playbook-for-transformational-change/
https://www.dnb.co.uk/perspectives/industry-insights/insurance-digital-transformation-trends.html
5
https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/three-new-mandates-for-capturing-a-digital-transformations-full-value
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