The digital revolution is having an immediate and wide-ranging impact on how insurers do business. Consumers want faster service across a range of platforms, and they want products that are tailored to their individual needs and preferences. To keep up with those demands, insurers need to embrace a forward-looking, customer-centric business model that provides customers with anytime, anywhere access to services.
However, they can’t just leap into a digital future. They first need to review their existing digital strategies and learn how to create the most value from current and emerging digital technologies.
The digital fitness model is an approach that helps insurers get a clear picture of their strengths and gaps in 22 key capabilities, which are centered around five pillars:
Intuitive, on-the-go access
Personalized offerings and pricing
Operational performance monitoring
Componentized product model
Effective innovation process
Fully integrated digital services
Real-time insight from rich, dynamic data
Dynamic plug-and-play sourcing
Flexible infrastructure and architecture
Digital security and privacy
Test, learn, and share culture
Steering of a flexible organization
Based on the information they discover during the digital fitness assessment, insurers can take steps toward building more competitive digital business models.
Begin by assessing key digital capabilities through an online survey of functional leaders and executives from all relevant areas. Key questions to ask at this stage include: How does the organization rate its current digital insurance capabilities? What are its current strengths? What weaknesses and gaps exist? The result of this process is a heat map that identifies key areas for action.
Now it’s time to define a strategic digital vision. Where does the organization want to be, digitally speaking, in the next five to ten years? What are the critical areas that need to be addressed to reach that goal? The model helps by identifying capability gaps and comparing the current status with strategic requirements. The results of that process inform insurers how to prioritize tasks into actionable steps that lead to the desired digital fitness level.
Creating a transformation roadmap involves balancing priorities, sequencing and prioritizing initiatives, and securing funding. The roadmap should spell out which areas require action and prepare business cases for each. It should also detail the required time, effort, skills, and responsibilities. A good roadmap focuses on initiatives that will lower costs through greater digital efficiency and counter competitive threats by increasing organizational flexibility and scalability.