Life Insurance

INSURER GROWTH DEPENDS ON DIGITIZATION

With insurers focused on generating profitable growth, we have been examining the various pitfalls that senior executives can fall into that would leave their organizations less than fully optimized to achieve that growth. This time, we’ll look at where companies around the world agree they need to reinvest the savings they realize from cutting costs that add no value and do not contribute to their growth goals.

The executives we have surveyed are misaligned with one another on growth priorities, but they are united on one topic: the importance of digital technology to reaching their growth goals.  Eighty-five percent of survey respondents agree that digital technology enables growth, and 82 percent believe it enables advanced operating models. As a result, 54 percent say they need to reinvest savings from cost reductions into digital technology, Accenture reports in Increasing agility to fuel growth and competitiveness.  The report was based on surveys of 700 executives in 13 industries in nine regions around the world, plus interviews of 65 analysts who follow those industries.

Executives consider digital technology the primary area for reinvestment—followed by launching new products and services, 46 percent, and expanding into new product/service lines or customer segments, 45 percent—because it can accelerate an organization’s second and third priorities. Executives also view technology as the most impactful way to reduce operating costs and ensure that an organization is positioned properly for the future. Indeed, 61 percent of survey respondents said they would increase technology if forced to operate at half their base cost.

We agree that this is the prime time for businesses to embrace digital technology. Digital investments enable companies to get ahead of industry disruption by accelerating innovation, fueling more efficient operations and delivering personalized customer experiences—all of which will help fuel growth.

Many businesses are digitizing the front office—using analytics, the cloud and Internet of Things-enabled innovations—to get closer to the customer as well as take advantage of other benefits of digitization. In addition, companies are digitizing nontraditional functions to reduce costs and improve efficiency and scale. For example, digitizing human resources will allow “knowledge workers” to become better “judgment workers.” Information will be more available to employees to enable predictive, not reactive, decisions. Digitization also will revolutionize the procurement function, giving procurement teams real-time information on demand and supply and pricing. It also will create a virtual collaboration between a company and its suppliers.