Every insurance executive I meet with recognizes the importance of digital to their ongoing business success, and most are full-speed ahead on programs to upgrade their digital business capabilities. But if I asked 10 executives to define what they mean by “digital,” I’d get 10 different answers. As a result, insurers may be investing in certain digital capabilities while overlooking others that are even more vital to their success.
To make matters worse, I find that most executives lack an objective assessment of digital maturity, relying instead on their gut feelings, which can easily lead them astray. They may feel all is well in areas where substantial investments have been made when, in fact, the company is lagging behind its competitors or may continue to invest in areas where it believes it’s already doing well.
You Can Only Manage What You Measure
This is why we created a digital maturity assessment tool to help our clients gauge progress against key business objectives and industry standards of excellence. Based on our work with clients across multiple industries, our Digital Maturity Diagnostic (DMD) framework provides a holistic assessment and comparative benchmark, scoring 100 specific digital features that address both an insurer’s digital capabilities and its ability to manage vital change in its digital journey.
For example, in analytics, the DMD looks at such issues as the use of AI/machine learning, data strategy and intelligent devices. In the area of a company’s “digital DNA,” it examines change management, the existence of digital leaders, executive vision and agile delivery, among other critical digital dimensions.
After completing the DMD online survey, our analytics engine benchmarks the insurer against the DMD database of industry peers, identifying gaps and highlighting the highest priorities to improve specific digital capabilities that will “move the needle” to enhance their digital maturity. The diagnostic also examines digital maturity within core business functions, such as claims fraud, to help insurers understand the concrete business impact of a digitally enhanced business. Perhaps most important, by conducting periodic reassessments, a carrier can measure the impact of its digital investments over time.
Large insurers completing the DMD fall into three categories:
• Roughly one-quarter are what we call “Digital Dominators” – companies that are far along in their digital program and are pursuing digital at scale. We’ve found these companies experience higher revenue growth and profitability compared with their less digitally mature competitors.
• About half have made some progress in employing digital at the business unit or departmental level but have not adopted an enterprise-wide approach.
• Finally, roughly one-quarter are “Digital Dabblers,” with only limited investment in digital.
Our Digital Diagnostic in Action
The power of the DMD framework was highlighted for me recently when meeting with the CIO and other senior executives of a major insurance company to walk them through the self-assessment. The CIO knew the company needed to improve on analytics but didn’t know where to start. As the team went through the diagnostic process, it became evident that the company would be challenged to progress with its existing analytics strategy unless it first improved how it collected, managed and mined data.
The executives also found the company was behind in accessing digital skills. The CIO had been struggling to convince leadership of the need to hire additional digital talent but now had a rigorous, objective and fact-based assessment that demonstrated the imperative for securing additional digital talent.
The DMD provided the company with a clear picture of its most important needs and gaps to address to elevate its digitally maturity while also furnishing an objective assessment of its competitive position, which is vital for garnering strategic support from senior management.
Lighting the Path
Digital requires a clear strategy, but most companies have relied primarily on intuition, hunches and guesses rather than a fact-based assessment of the type provided by our DMD. In short, insurers must stop working in the dark and shine a light to reveal a more informed digital way forward.
Doing so will help insurers’ ensure their digital business initiatives not only continue to meet internal objectives but also enable them to remain relevant amid increasing incursions from insurtechs and big techs, which are continuously raising the competitive stakes.
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