Very few insurers are generating strong returns from their investments in digital technology. Five key steps will multiply the value created by such expenditure.
Many insurers can increase substantially their returns on digital technology investments by shifting their business strategies. Changing decentralized business models and rolling out key digital capabilities globally will enable them to multiply the value created by such expenditure.
Very few insurers, as I mentioned in my previous blog posts, are achieving strong financial results from their investments in digital technology. Outdated distribution models, lack of investment focus and poor understanding of local needs often hamper the creation of value.
We’ve identified five key steps that will enable insurers to ramp up the value they generate from digital technology investments.
Measure digital progress: Establish clear metrics to measure digital maturity and digital value creation throughout the organization. It’s essential that insurers understand and systematically assess these factors. Often digital investments escape critical screening simply because they’re labelled “digital”. Our Digital Performance Index, which I discussed in my earlier blog posts, shows how a comprehensive framework of value-creation performance indicators helps clarify the status of digital investments and identifies obstacles to improved performance.
Focus on the digital multiplier: Distinguish between digital capabilities that are specifically local or apply to a particular line of business and those that can be implemented across the organization. Align digital investment decisions with global or regional strategies to multiply returns and speed up value creation. Investments in mobile technologies, analytics, digital customer engagement platforms, the Internet of Things, robotics and artificial intelligence, for example, can deliver huge benefits once the right balance between global capabilities and local needs have been defined. Similarly, investment in innovation, insurtech opportunities and the acceleration of digital capabilities can be maximized by contrasting global opportunities with local benefits.
Balance digital investment: Digital High Performers achieve high returns from their digital investments by balancing their expenditure across the four key areas of digital performance – plan, make, sell and manage – at all levels of their organizations. Too often insurers skew their digital investments towards one or two of these areas.
Be geo-savvy: Increase the benefits of digital investments with smarter geographic and digital investment portfolio management. Allocate expenditure to specific local opportunities, or regions, that can quickly create value. Avoid over-investing in countries or business lines where competition is less intense or where low digital maturity does not require or will not bring substantial market differentiation.
Rapidly share successes: Multiply the value of digital investments by swiftly deploying successful local practices in business areas or geographies where centrally-developed digital capabilities are unsuitable. Use training and education, to promote a digital culture and share learning experiences, to accelerate the transfer of successful practices, increase scale and further multiply investment efficiency.
For more information about how insurers can maximize the value generated by their investments in digital technology, take a look at this link. I think you’ll find it worthwhile.