Digital transformation in a time of crisis
The need for digital transformation becomes even more urgent during a period of dramatic change and great uncertainty.
The only way out is through.
I understand the temptation to do nothing, to hunker down and wait for the storm to pass. But in insurance, there’s always another catastrophe on the horizon, and there’s no excuse for not being prepared.
It almost doesn’t matter. In any of those events, insurers and their customers benefit from secure and redundant data, streamlined digital processes, safe and productive workers, and robust customer self-service options. All of this is to say: completely digitized, cloud-based operations are the way to make any insurance business less vulnerable to catastrophes.
All around the world, we work with insurers offering almost all lines of business. So, as to not point any fingers, I’m going to reach just outside of our orbit for some illustrative examples of organizations caught flat-footed by the pandemic and its secondary effects.
Archaic and unable to scale
Since this story about the novel coronavirus aired on “60 Minutes” on April 5, 2020, more than 6 million more people have filed for unemployment insurance, bringing the total to more than 16.8 million as of Monday, April 13, 2020. That’s an estimated 13% of the workforce in the United States, and it could be the highest level since the Great Depression.
As a result, unemployment insurance agencies and their infrastructures are completely swamped with new claims applications. It’s a bad situation made worse by the fact that the archaic systems and methods for managing this tsunami of claims are not scalable or agile.
They also are not fixable. Just yesterday, this CNN headline grabbed my eyes: “Wanted urgently: People who know a half-century-old computer language so states can process unemployment claims.” In New Jersey, where I grew up and learned to program for Prudential, there’s a lack of trained professionals experienced with COBOL and the mainframe computers upon which these core systems run. That means that there’s no relief in sight for claimants waiting for benefits or to file claims, nor for those processing the claims.
And they are not the only ones. The Illinois Department of Employment Services has posted this on its website: “In order to process the extremely high volume of benefit claims due to COVID-19, IDES has implemented the following schedule for those filing claims online and over the phone.”
In Florida, the number of claimants is so great and the core systems so overtaxed, they have turned to paper forms to process claims. Who is going to process those claims? Where will they process them, and how soon? All reasonable but unanswered questions.
The private sector also is having a hard time. While undoubtedly better funded, my bank, which frequently is held out as an example of a digitally transformed financial services organization, is displaying this message on its website: “Our call centers have limited hours temporarily, and we’re experiencing very high call volumes. We urge you to skip the wait by using ‘ABCD.com’ and the ‘ABCD Mobile’ app anytime.”
How long is temporary? Who can say? That message has been posted for weeks. But the bank offers options beyond its overtaxed call centers and shuttered offices. My ability to access accounts, make and receive payments, and self-service my finances is uninterrupted. In fact, for the first time ever, I photo-deposited two checks using the mobile app rather than venturing out to use an ATM. I was surprised and delighted at the ease and security of the transaction.
So, what can insurers do?
A lot, actually. They can learn from these examples and fight the urge to cut IT budgets or suspend projects. They can pursue digital transformation as if their very existence depends on it. And they should because it does. The value of digital transformation is that it helps insurers prepare for so many possibilities and opportunities.
Digital insurers are ahead of the curve because they:
- have their core systems in the cloud, which means they are redundant, secure and can massively simplify work-from-home;
- are scalable, which means they are ready for surging numbers of quotes, claims, call volumes and more;
- offer customer self-service opportunities, which potentially improve customer experience and satisfaction, relieving stress on call centers and freeing other resources to be deployed where needed;
- can understand their customers better, act on that knowledge, and more effectively triage service requests leading to better outcomes overall’
- are better prepared to leverage GPS, weather, IoT and other third-party data sources to pre-fill forms, accelerate claims processing, increase accuracy and mitigate risks.
The list goes on
While medical professionals around the world are struggling with the horrible realities of COVID-19, technology and business professionals face their own challenges, pandemic-related and otherwise. And there are lessons to be learned. Chiefly, that those who take responsibility for planning, preparation and protecting their people and assets will fare better than those in denial or without budgets. Also, open, agile, digitally-enabled organizations are in a much better position to persevere during crises than those that are not.
Being daunted by the prospect of a full, multi-line core systems replacement is not an excuse, either. There are greenfield approaches that can get digitally-challenged insurers started down a test-and-learn path, and which can lead to enterprise-wide innovation and transformation.
Despite the likely recession and negative short-term impact on IT budgets, the insurance industry has an obligation to respond quickly to customers, members, brokers, agents and others. It also has an obligation to respond quickly and without interruption regardless of looming threats like pandemics, tornadoes, hurricanes, floods, fires and other catastrophic events.
Being in a position of IT leadership means leading, especially during difficult times. Now is not the time to dither. There is no turning back the clock or going back to the old ways. Digital transformation is the only way to prepare for a future that’s arriving now. The only way out is through.
Jim Caruso is executive vice president of Worldwide Professional Services at EIS Group. For more information, send an email to info@eisgroup.com. These opinions are the author’s own.
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