Insurance executives recognize the importance of digital and analytics capabilities for their companies. They understand the "why" behind pursuing digital transformation but often struggle with the "how." There isn't a single path to follow, which leads many insurers to get stuck in the process.
Key takeaways from the McKinsey North America Insurance Digital Leaders Forum are as follows:
1. Spend $1 for $1: Deploying digital and analytics effectively requires investment not only in technology but also in talent, capabilities, operating models, deployment, and change management. Insurers need to focus on the business problems they face and think proactively about change management as a crucial enabler.
2. Focus on the future of work: Traditional skills and ways of working won't suffice in the digital journey. Insurers need to understand the skills and roles required in the future and make necessary changes to incentives, performance management, career progression, and other areas. Working in interdisciplinary teams is essential for digital transformations.
3. Eat the digital elephant one bite at a time: Instead of approaching digital transformation as one large project, insurers should break it down into staged solutions. Building digital, data, and analytics strategies based on business priorities and the value at stake allows for a big-picture approach and maximizes return on investment. Learning from best-in-class efforts and sequencing them for maximum value is crucial.
4. Obtain "platinum" sponsorship: Strong sponsorship at the top level is a critical determinant of successful digital transformation. Incumbents should leverage their data, domain knowledge, and operational maturity, but they often face challenges in obtaining the necessary capital and talent. Activist sponsorship can help overcome bureaucracy and drive successful transformation.
Insurers need to better understand the opportunity presented by digital and analytics, learn from other companies, and take a strategic and systematic approach to digital transformation.