Advanced Operating Models
Dec 20, 2018

Four ways insurers should align processes to support digital transformation

New technologies will only succeed if processes are tackled first

In today's competitive, customer-focused insurance market, it's essential for carriers to embrace and execute successful digital transformation. But I'm continually seeing companies attempting this transformation without first determining its future vision or realigning processes to support it. These companies put the digital cart before the process horse, optimistically hoping the new digital enhancement will miraculously drive the desired future state processes.

Unfortunately, this will never be the case. Companies must first define what the future state of processes should be to support corporate objectives and only then carefully select, design, and develop the digital response.

There are four key steps an insurer can take to ensure the proper realignment of processes to drive successful digital transformation.

Define your target operating model (TOM)

Designing a new target operating model is the foundation of any proposed digital transformation. It will provide the vision for the insurer and then link together the organizational design, strategy, and technology to achieve it. The customer journey can be overlaid across the new design to pinpoint the various interactions across processes and technologies.

There is no set format to build a TOM, but the carrier must make sure it includes processes, channels for executing processes and procedures, customer touch points, technology, and future design and strategy.

Finally, the insurer must compare the current TOM to the proposed version to identify where changes will occur, any gaps, and how to deal with them.

Identify processes ripe for automation

As the carrier builds out its vision of process realignment to underpin digital transformation, it should identify which current processes and procedures can be automated using technologies such as robotic process automation and analytics. By removing time-consuming, manual tasks, employees can utilize their skills more effectively by focusing on investigating claims or spending time on customer service to improve satisfaction and retention.

Document management is a popular area of automation, so documents and forms can be automatically created and sent to customers. Claims segmentation and triage are also top of the list, using predictive analytics to enable the speedy and accurate assignment of claims, inspection allocation, and activity/diary management to assist loss adjusters throughout the claim life cycle.

Decide which processes can be outsourced

Another key component of this process realignment is identifying the task and procedures that can be outsourced to a third party to deliver operational efficiencies and improved accuracy. This business-process outsourcing also allows claims leaders to focus the skills of claims staff on the higher-value tasks that make a bigger impact to the bottom line.

Some of the prime tasks suitable for outsourcing include first notice of loss capture, document management, mail processing, and subrogation.

Invest in change management

The only way an insurer's digital transformation investments will reap the expected rewards is if employees are on board with the changes. They must buy in to the new future vision and adopt the changes to processes and procedures for it to work. This adoption is achieved by embedding proper change management throughout the whole life cycle of the project, from designing the future state vision to the implementation of new technologies. This will eliminate two major risks associated with digital transformation projects – that productivity will drop off as changes are implemented and that future state performance is often short lived as old habits return, new processes are abandoned, and efficiencies and standards drop (figure 1). 

A comprehensive change-management program throughout the project will alleviate the fear of the unknown and reduce the chance of losing skilled staff. It should encompass leadership engagement, staff engagement, organizational alignment, adoptions, and business readiness (figure 2).

The elements of integrated change management

About the author

Tim Thomas

Tim Thomas

Vice President, Insurance

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