As insurers around the world start to reinvent themselves through ‘digital transformation’, we sat down with Mark Inkster, Chief Digital Officer at AEGON’s Asia operations to talk about the opportunities and challenges of driving digital through the insurance sector.
People tend to talk about digital transformation in very broad ways, which can lead to disagreement on what the term means, even within the same company. I look at digital as bringing a natural and fairly predictable set of changes to the insurance industry, not a revolutionary one. The challenge is not so much in predicting the changes as it is in transforming the organizations to make those changes happen. New processes, skills and ways of working are required, and this is the hard part. People’s jobs change, and the things that made them successful in the past won’t always work in the future. New departments, such as digital marketing, are formed, generally with different cultures than exist in more traditional parts of the organization, and these new groups can drive substantial revenue. The transformation comes through the implementation.
The insurance industry is going through digital transformation much later than most other industry sectors. The travel industry and even parts of the mutual fund industry were already starting to transform 20 years ago. What that means is that insurance executives have had the benefit of watching digital transformations unfold for two decades and – as a result – they are probably better prepared than their peers in other sectors were in the past.
On the one hand, I think regulation has actually allowed the insurance industry to undertake this transformation a little slower because startups, which are usually key change agents, can find it hard to navigate the regulatory environment. But I think regulation has also reinforced an industry culture that is – appropriately – relatively cautious, and which does not always align with the culture that you would find in a digital transformation team. Insurance is not an industry that lends itself to the ‘go fast break things’ type of approach that is so prevalent in digital startups.
I wholeheartedly agree that leadership is critical and that insurers need some top down guidance to drive change. It’s also important to create a common sense of purpose and urgency within the leadership team so that everyone knows what we are doing and why. We recently brought 80 of our most senior global leaders together in Silicon Valley to discuss digital transformation with some fascinating technology leaders. That initiative gave us common perspectives and language, which in turn has helped accelerate several of our initiatives.
Specific digital skill sets such as search engine marketing or web analytics may need to be brought in from parts of the industry that have already digitized or from other sectors where they are fairly common. But there is a big difference between the skills needed to execute digitization and those needed to guide a successful transformation. You really need a strong change management capability, and that might come from inside the business or it may come from other industries that are also characterized by large, slow-moving organizations.
The biggest challenge is finding the right degree of separateness for the different elements. Some initiatives need to be run completely separate from the existing businesses, others may need tighter connections within the organization and still others will need loose couplings. It’s not one size fits all, and it needs to evolve over time. So, for example, if you are trying to create digital marketing capabilities, you may want to keep that separate from your traditional marketing group for some time to protect the new ideas and their unique ways of working but – in time – you will need to integrate them back into the core. So you really need to start by getting those degrees of separateness right.