Covid-19: The tipping point for the insurance industry's digital transformation?
King Price CFO Rhett Finch: Covid-19 will quickly show which insurers are geared for a digital world.
Three months ago, the biggest issues in the insurance industry were the growing threat of cyber-risks, how to deal with market instability and a bleak macro-economic picture. Then Covid-19 came along and turned everything on its head.
The first thing the pandemic highlighted was the importance of a disaster recovery plan. Our most immediate concern was to ensure the health and safety of our employees and clients. In less than a week, we had 1,000 people working from home, with resources dynamically reallocated where necessary. As the lockdown progresses, we’ve been encouraged to see how many people flourish while working from home, which may offer a rethink on the workplace of the future. But that’s just logistics.
We’ve been reminded of the importance of good, strong communication, especially internally. In a time of crisis, employees look to their leaders for reliable, factual information, and this pandemic has underlined the ability of effective communication to keep a team engaged and productive.
After the initial frenzy subsided, the bigger challenge became forecasting in an uncertain time. The ultimate impact of the crisis depends on how long it goes on for and its magnitude, and that’s almost impossible to predict. For most insurers, identifying and planning for all the possible business outcomes – best and worst cases – is probably taking up a good deal of their time and brainpower right now.
If ever a CFO wanted the opportunity to show off their core financial skills, this crisis is it: providing frequent financial updates to the business, fast forecasting and scenario planning, and tight cash and liquidity management. As King Price CEO Gideon Galloway says: who could have imagined that we’d be adjusting our business plan because of a virus?
But perhaps the biggest realisation has been that the pandemic could be just the tipping point the industry needs to leap headlong into a digital transformation. Working from home, social distancing and lockdowns have all highlighted our dependence on being digitally connected to keep our businesses running. Consumers and businesses are doing more business online, and using social media and digital tools to communicate.
This will quickly show which insurers are geared for a digital world – and which not. This isn’t about data, and how we use it. It’s about how we use technology to drive a sea-change in the customer experience and provide slicker sales and service. It’s about how we, as insurers, create faster claims processes and back them up with world-class call centre technologies. After all, quick settlements are one of the most important elements of customer engagement in the insurance industry: it’s literally the most rewarding experience a customer can have.
Digital transformation also means we stop talking about artificial intelligence (AI), and start deploying it in a way that makes the customer’s life easier, like combining advanced data analytics and AI to build rock-solid fraud detection algorithms.
Before Covid-19, the insurance industry was already in the midst of a digital transformation. Now, we see that even the most aggressive pace of change probably wasn’t enough. As financial leaders, it’s up to us to help our businesses use technology to take advantage of the new opportunities that will arise from the crisis, while providing better risk management and cost optimisation than before. Combine that technology with a higher purpose and a vibrant company culture, and it’s clear that the best is yet to come – virus or no virus.