The Future at Lloyd’s outlines strategies to transform insurance so it’s fit for purpose in the digital economy. It makes some excellent points. But technology – and customer demands – continue to evolve at pace. The time has come to stop talking and start transforming.
Lloyd’s of London’s recent publication The Future at Lloyd’s acknowledges a growing gap between traditional insurance offerings and what customers want. The needs and service level expectations of consumers and businesses alike have shifted in the past decade. This creates market opportunities for new entrants, and it puts more established players at risk of disruption.
Deeds not words
It’s one thing to theorise about insurance products and service levels that continually adapt in line with customer needs. But how do you go about closing the gap between the vision and today’s reality?
Insurance transformation calls for a blend of ambition, effort and pragmatism. With the right goals and strategy in place, it’s possible to carve out new approaches that enhance competitive differentiation and drive commercial advantage on an ongoing basis.
All of this requires widespread modernisation of the way things are done. It’s not a one-off project, but an entirely new way of thinking, working and innovating. In essence, change becomes the new normal.
This can seem overwhelming to large and complex organisations. But three core factors can facilitate modernisation if they’re handled with care and expertise. Together, they offer a practical way to turn a slow-moving monolith into an agile, adaptive business. Which puts long-established insurers with the additional benefits of scale, reputation and experience in a powerful position.
Three practical steps for insurance transformation
1. Maximise cloud capabilities
Digital transformation and cloud migration tend to go hand-in-hand for enterprise-level organisations. It’s true that all-in cloud adoption is central to digital economy success. But it’s important to ensure stakeholders understand that moving to the cloud in itself won’t transform the business.
The way infrastructure is recreated in the cloud has a bearing on an organisation’s future performance. Evidence points to the fact that practices such as infrastructure as code are linked to organisational growth, profitability and increased market share. So, evolving or rewriting products and applications to fully exploit the capabilities afforded by the cloud environment reaps dividends.
Moving to the cloud is an opportunity to accelerate modernisation by improving how things are built and done. It’s not possible to improve everything in one fell swoop. But you can prioritise applications that are likely to derive commercial benefits sooner, and ensure others are migrated in a way that facilitates future improvement when the time is right.
2. Embrace modern ways of working
The Future at Lloyd’s emphasises a pressing need to address new risks faced by customers, calling for insurers to ‘supercharge innovation’. Much is written about innovation, agility and adaptiveness in the digital economy. But translating the theory into meaningful business practice can be a challenge.
Fundamentally it’s about generating highly relevant new products and features, then getting them into customers’ hands quickly. However, service reliability must not be compromised in the process, especially if you’re an established business with a hard-earned reputation to uphold. This is where DevOps comes to the fore, offering ways to improve both organisational throughput (speed and frequency of software changes) and stability (change failure rate, time to restore service and availability).
DevOps is more than automation and technology. It’s about fostering a cohesive mindset across the organisation, which demands a cultural shift reaching beyond the realms of development and operations. Achieving continuous innovation without harming stability demands collaboration and a shared sense of ownership. One highly effective way of achieving this is to switch from a project-led to a product-focused model where people are held accountable for long-term performance. This encourages operations staff to embrace experimentation (accepting that failure is a necessary part of the innovation process) and it ensures developers take more responsibility for operability (reliability becomes a central facet of new features).
3. Bring your people on the journey
The attitude and aptitude of people and the way they interact with each other plays a major part in the success or failure of business transformation. Future at Lloyd’s rightly points out that ‘human capital is more scarce that financial capital’ urging the industry to ‘compete harder for the best talent’.
However, it would be a mistake to overlook or write-off existing talent. When you upskill, nurture and empower your teams, it can unleash exponential gains. DevOps and Agile certification provide a solid, vendor-agnostic route to boost technical capabilities associated with modern ways of working. And when it comes to addressing deep-seated organisational practices that are resistant to change, DevOps simulation exercises can engage and energise the workforce.
Many barriers to change are linked to cultural, not technical, factors. They’re often rooted in a lack of understanding or poor communication, further exacerbated by siloed working practices. It’s important to call these issues out and address them sensitively but tenaciously. In this way, you can achieve a one-team culture where people understand and care about the bigger picture.
Lloyd’s of London has done an admirable job distilling what insurers need to achieve for relevance in the digital economy. And The Future at Lloyd’s encourages input from beyond the sector, which will further enrich the debate. But don’t let consideration turn into procrastination.
There’s no escaping the fact that business transformation is hard. But delaying tactics don’t make it any easier, they only serve to increase vulnerability to disruption in the meantime.
Action is needed to improve the relevance, resilience and responsiveness of insurance providers. And it has to happen quickly. The insurers dominating the agenda tomorrow will be those that embrace change today.