Insurers need cultural overhaul in digital push

Digitalisation seeks to simplify processes, not complicate things.

Remaking an insurance company’s products, services, and business models under a global digitalisation push requires not just understanding technology, but also cultural change, according to Liberty Mutual Insurance Co.

The industry should digitalise not just for the sake of it; their people should also understand why it is important, Sourabh Chitrachar, regional vice president at Liberty Mutual, told the Insurance Asia Summit in Andaz, Singapore in September.

Chitrachar, who leads the technology strategy at Liberty Mutual, said companies should be ready to adapt. “It will always happen, and we need to be able to envision where the organisation is heading,” he added, referring to digitalisation.

“The second core is human-centricity,” he said, noting that whilst technology seems easy at face value, changing people and addressing their concerns is the hardest part. 

Insurers should also “keep it simple” by avoiding too much jargon. “The aim of digital transformation is to simplify processes, not to add complexity just for the sake of adopting new technology.”

Chitrachar said customer expectations are changing, and they should have the option to be able to do business online. “I, as a customer, haven’t visited a bank branch in a decade,” he pointed out.

He also said insurance companies face stiff competition from fintech startups and their disruptive technologies. “They're not traditional insurance organisations that have been around for over 100 years.”

These new players include Post Insurance Services, Inc. in the US, Go Digit General Insurance Ltd. in India, and Amazon.com, Inc. 

He told summit delegates organisations would face margin pressures as long as inflation remains high. “Shareholders will still demand higher returns. The question is, how do we achieve it?’’ 

Chitrachar said digital investments in the insurance sector would largely be in established applications such as portals; and the ‘next big things’ such as generative artificial intelligence (gen AI), data analytics, cloud computing and Internet of Things.

“Lastly, we have emerging technologies like blockchain and virtual assistants, but so far, their value hasn’t been fully proven,” he added.

A quarter of global private equity and insurance executives think they need to prioritise AI in the next two years to bolster their technology tools, according to a report by business and technology consultant West Monroe released in September.

They also think cybersecurity (26%) and data analytics (26%) were important, whilst 30% of the 250 respondents think data analysis will be the aspect of deal-making that is most disrupted by the evolution of AI.

AI models can simulate future scenarios, enhance the accuracy of risk estimates, and drive better pricing, whilst identifying false claims more effectively, KPMG said in a report last month. “There are powerful AI applications for the insurance industry and it will likely force innovation in many areas.”

“We’re also seeing spikes in digital investments, especially in customer service and product launches, such as embedded insurance,” Chitrachar said.

Embedded insurance — in which customers can buy coverage as part of the product or service they are buying, without having to go through a separate insurance provider — in the Asia-Pacific region is expected to grow 13.9% annually to reach $73.75b in 2024, according to Research and Markets. Market revenue will reach $255.49b by 2029 or a compound annual growth rate of 28.2%.