What are the key trends driving technology transformation in the insurance industry and how is insurtech reshaping the insurance landscape? Deloitte provides a wealth of market insights and proactive services to insurers worldwide and helps businesses find opportunities for growth. We sat down with Arun Prasad (Global Insurance Sector Consulting Marketplace leader, Deloitte Consulting) and Mark Patterson (Partner, Global P&C Insurance Segment Leader, Deloitte UK) to discuss the state of technology within the insurance industry.

Arun, are customer expectations the biggest driver behind “The Digital Age”?

Arun: “There is no doubt that customer expectations are at the foundations of the new Digital Age. In the Digital Age customer engagement is expected, relationships are in real-time, choice is infinite, delivery is on demand, change is constant and technology enables everything we do.

Insurance experiences are compared to, not only other insurance companies, but also to technology contemporaries encountered in everyday life. Regardless of where you sit in the ecosystem or in the insurance life cycle, not just in rating or in claims, relationships are important across the entire life cycle. Technology impacts every single thing that we do, and change is constant. There was a time when we could not imagine for example embedded insurance or ChatGPT. Technology is an element that is embedded into everything and therefore understanding its connection to insurance is critical to the success of the industry as a whole.”

What opportunities does “The Digital Age” bring?

Mark: “Insurers need to further embrace digital transformation but they need to do this in a more holistic way, while continually challenging orthodoxies. Opportunities and challenges in the insurance industry are not only about customer experience. Think of OEMs entering the car insurance market, how are you adapting and competing? Climate change makes the industry unstable and property insurers are pulling out because their underwriters notice that the numbers don’t add up. Not only customers but also brokers expect digital experiences and products to simplify their work. Finally, AI is disrupting operations, introducing new risk classes, and exposing unseen risks. This does not only apply to the customer layer, but across the organization.”

Besides Technology, what are other elements at the foundation of transformation?

Arun: “Technology is only one piece of the puzzle. Organizations must look at people, processes, and technology to embrace change and to challenge the status quo. Only holistic digital transformation will enable the insurance of the future. Underwriters, product designers, practically everyone in an insurance organisation needs to adapt to the current age, and there are also regulatory and other not-technology-related processes that are very important for success.”

Where do you start with helping your clients?

Arun: “You have to start at the foundation and muscle memory of the organisation, as it is a people change effort to make an organisation more digitally agile. Holistic digital transformation means iteratively reshaping your business from the ground up to achieve new structure, processes, culture and mindsets that allow you to drive change and adapt to new challenges. Also, external collaboration is very important. Whether you are in a tech startup, you’re a carrier or you’re working as a venture capital PE firm, you have to look at digital transformation as collaboration, not just disruption. Everyone in the ecosystem is important as each of us brings benefits that help the industry to get better. We have to realise that collaboration is needed to serve the end policyholder and protect society and that it drives additional value for all participants in the ecosystem.”

In your opinion, how are insurers doing now on their path to ‘Digital’?

Mark: “While many insurers are busy with digital transformation, they have not taken it far enough. Many get stuck as they are working in an endless loop of ‘doing’ digital things, which is an illusion of ‘being’ digital. They should be optimizing and changing business-, operating- and customer models, to profoundly differ from prior models. The goal needs to be to actually operate in a model that is different, where everyone in the organisation is integrated and thinking across a digital mindset where technology is embedded.”

For insurers still hesitant on the best approach to ‘being digital’, how should they flip orthodoxies in pursuit of a better way to serve their customers?

Mark: “As we mentioned earlier, customer-facing changes are not the single most important when addressing digital. Digital is about people, process and technology, a true organisational change. Also, to be a digital insurer, you don’t need to fire everyone and hire a bunch of digital natives, you need to enable everyone in your organisation to thrive digitally. Another orthodoxy is that people don’t like to talk to chat-bots, that’s why customers and agents keep calling. Instead of discussing chat-bots, try to solve the issue, that customers and agents want accurate information extremely fast in an easy-to-understand way, and they want to be able to get that anywhere at any time. Go back to the root problems, and as you start to unpick that problem, you’re going to realise that you need that digital capability, data and technology throughout the whole organisation. Furthermore, people do not only want to interact with insurers when they buy a policy or need to file a claim, they are willing to interact if there is value for them. Digital can increase engagement and retention. Finally, insurers may think that just a few areas in their organisation are touched by digital, and only focus on those ones. But actually, digital is the lifeblood of the modern insurance organisation and belongs across the entire insurance value chain.”

Arun: “One last thought on this: insurers might think that their legacy systems make it hard to innovate. But actually, innovation is necessary for the survival of the organisation. Being digital is about appreciating the stepping-stone projects that you may take on and encapsulating steps that help you get to that end solution over time. We need to figure out solutions that are a little more incremental in nature that help showcase the value of digital to the end-consumer, as well as to the broader organisation because otherwise, it is a failed program, a failed implementation of transformation that sometimes clouds the real opportunity that we each have.”

About Deloitte

Bringing together some of the best minds from around the world, Deloitte provides a breadth of market insights and proactive services to insurers worldwide. Tapping into their nuanced understanding of the insurance industry, they help insurers navigate the increasingly complex landscape and get to the heart of their business challenges, helping to find opportunities for growth.