One of the key findings of PwC’s 21st Global CEO Survey is that whilst insurance continues to be one of the most disrupted sectors in the global economy and insurance CEOs are extremely concerned about the pace of technology change and cyber threats, surprisingly, they are also optimistic about their organisation’s revenue growth in the next three years.
So what is really keeping insurance CEOs up at night?
The speed of technological change and cyber threats coupled with the resulting availability of key skills (digital or otherwise) are amongst the concerns that worry insurance CEOs the most. Technological advances are already changing business and operating models. It is undeniable that continually cutting costs to stay operationally lean is no longer sustainable.
Instead, insurance companies should embrace the changes brought about by the speed of technological changes and look to innovate the way they do business. The use of predictive analytics and artificial intelligence is no longer new to the industry. We have to move away from just a pure system implementation or enhancement to one where we redefine the job profile and free up people’s time to focus on transforming and harnessing the benefit of automation with human intelligence.
Insurance CEOs bullish on industry growth
On the other hand, insurance CEOs are confident of the growth in the industry. This optimism can be explained by the fact that the anticipated disruption from new entrants/competitors such as insurtech and digital platform players have still not yet materialised in a big way as initially anticipated a year ago. Instead, tie-ups with the right partners and forming alliances that create synergies to harness the automation capabilities that these insurtech companies and digital platform players could offer isthe winning formula.
Cyber threats have also opened up opportunities for insurance companies to offer cyber insurance that many CEOs in other sectors are most concerned about. All of the above require a clear strategyand roadmap, and more importantly, effective key stakeholder engagement in order to enable and manage the change.
Who are the key stakeholders that Insurance CEOs need to manage in their transformation journey?
There are the shareholders, who are constantly looking for higher rates of return, which then drives many of the insurance CEOs to deliveron this expectation whilst possibly ignoring the need to invest in the short to mid-term horizon in order to address the disruption so that the organisation can propel forward in the longer term.
Then there are the boards of directors, who are steering the direction of the insurance companies. There are also the CEOs and executive committees whose performances are measured by a set of KPIs that may no longer be aligned with the longer term transformational objectives to change into digitally-enabled, customer-focussed organisations with agile business and operating models.
There are also the people within the organisation. How to instill a shift in mindset, especially in the era where close collaboration of humans and machines is shaping how humans interact with the digital capabilities to create the cutting-edge business model. And are insurance CEOs currently too focussed on the customer experience and perhaps neglecting their own people strategy?
And of course, the regulators. Many a time, there is a disparity in terms of what the regulators expect of the insurance companies and what the shareholders expect. This disparity at times may hinder the transformation journeys that are embarked upon. Therefore continual engagement with and getting the buy-in of the regulators are important.
The key to coming out on top
In conclusion, whoever embraces change with proper change management, ties up with the right partners that will result in substantial synergies, and has the right stakeholder engagement will win BIG! The first big success story is what everyone is gunning for. But to do this, there are three key steps. Firstly there needs to be a mindset shift of all key stakeholders which could involve changing KPIs. Secondly, identifying and working with the right partners to move forward. Lastly, equipping all within the organisation with the appropriate skills and tools.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Insurance Asia. The author was not remunerated for this article.
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Woo Shea Leen and Penny Ying are both from PwC Singapore. Woo Shea Leen is the Insurance Leader, whilst Penny Ying is the Insurance Director.