Going digital: Redefining insurance technology
Managed digital business services can play a key role in transformation as insurers explore new tools.
There’s no doubt that technology is transforming industries around the globe. For insurers, this adoption has involved blending multiple legacy systems and providing staff training while developing products and procedures that meet policyholder needs and expectations. It is a complex process that involves identifying risks, access to adequate technology, significant investments and making informed decisions.
Mapping the insurance ecosystem
Digitalization is traversing the invisible walls across different domains, giving way to inter-industry competition on every front. Online retailing has set high standards for customer experience in every industry. Keeping this in mind, insurers are compelled to think radically about the way they assess risks, innovate products, handle claims, and, most importantly, manage customer expectations. This challenge is further complicated by geopolitical, environmental, regulatory and other constraints on the insurance industry.
Changing roles of service providers
Such a dynamic and ever-changing insurance landscape demands service provider transformation. The traditional third-party model (TPA), in many ways has become marginalized. While it has made the transition from “lift and shift” to a “lift and uplift” model, improving the value proposition, it never could materialize fully into a solid benefit. Despite relying on service providers to oversee portions of their business, insurers continue to be pulled into managing and coordinating between multiple providers, investing time, which could have been used for product ideation and risk decision making.
Transforming global business services to digital business services
The shared services model, known as global business services (GBS), has been experimenting and evolving to transform the businesses and come closer to tackling such issues. One of the studies on GBS by Hackett Group shows that over time, the focus on sheer process standardization, economies of scale and labor arbitrage has expanded to create value for the customer and the company through integration and redesign of the end-to-end process chain.
This integration and consolidation of entire services into one unified function is not an easy task. One undercurrent mode of this unification is deeply ingrained in the digitalization of business. Perhaps, this is the reason that GBS will need to transform from GBS to digital business service (DBS), not just in nomenclature but also the way they plan and execute their businesses. This increases pressure to bring not just change, but digital change and raises several questions.
- Is DBS ready with digital redesign models for their businesses?
- Is DBS ready with a digitally enabled and skilled workforce?
- Has DBS created a priority matrix to digitalize businesses?
- Has DBS accumulated sufficient digital tools to constantly drive insights and improve their process?
The strategic decision to digitalize and redesign the organizational structure involves juggling what one can or must delegate to a partner and what must be retained. Despite its ambitious goal of digital transformation and customer-centricity, DBS’s appetite for engaging with third parties remains low. Successfully leveraging a service provider is still the domain of low risk and high volume activities, and is only centered toward gaining efficiency. Future DBS projects should focus on effectiveness while examining the end-to-end process redesign to provide long-term benefits.
Managed digital business service
The question is then how to optimize this division of business priorities between captive and other services to ensure both are empowered, which contributes to the overall growth of the company. A holistic approach could include the entire web of the product lines and its corresponding support structure, which could be provided by the GBS function to facilitate quick business decisions, scalability of operations and improved business results.
In a time when new products are being launched into the market along with ever-changing customer needs, insurers have an opportunity to reconsider the value that can be delivered by sharing the non-core and non-IP elements of their business with digital business service providers.
Jonathan Phillips is the geography head for EXL in the UK & Europe and can be reached at Jonathan.Phillips@exlservice.com. Raman Kumar is a senior manager for the Digital EXLeratorFramework at EXL and can be contacted at Raman.Kumar@exlservice.com. Sumit Taneja is the global lead for Digital EXLerator Services at EXL and can be contacted at sumit.taneja@exlservice.com. A new whitepaper from EXL examines how managed digital business services will transform insurance. Opinions are those of the authors.
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