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Perspectives

Remaking Insurance CIOs for Digital Transformation

2016-10-25


To become digital leaders, insurance CIOs need to adopt new workstyles and mindsets, including collaborative partnerships, an eye for innovation and a knack for attracting talent, our recent research shows.

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Fourth in our four-part series. 

In this series, we explore the CIO’s role in the digital transformation of four industry sectors – banking, insurance, life sciences and healthcare – based on our exclusive CIO survey. In this final installment, we highlight our findings for the property and casualty (P&C) insurance industry.

To attract and retain digitally empowered consumers and the rising millennial generation, it’s not enough for P&C insurers to just do the same things better or more inexpensively. They must imagine entirely new ways of doing business: Delivering micro-policies at customers’ moment of need; influencing customers to reduce their risk profile; proactively coordinating on-site accident assistance. 

According to our study, however, many insurers continue to view technology merely as a way to drive down costs and increase process productivity. Indeed, while the vast majority (90%) of insurance CIOs believe they should play a key role in digital transformation, less than one-third (27%) actually are. The cost-cutting mindset seems to pervade digital efforts, as CFOs are more likely to lead digital transformation initiatives at insurers than other industries. 

Although this view hampers digital transformation for the industry, it also spells opportunity for insurance CIOs willing and able to shift their workstyles and mindsets in a digital direction. Already, industry CIOs are focusing on the right set of technologies and delivery capabilities – such as the Internet of Things (IoT), intelligent automation and telematics, as well as social, mobile, analytics and the cloud (the SMAC Stack). And they seem to understand that “being digital” requires seamlessly blending physical and digital components to deliver new value to key stakeholders. 

For example, top digital opportunities named by respondents were geared toward reimagining customer experiences and even rewiring business models, through usage-based insurance, delivery of an omnichannel experience across devices and the use of robo-advisors, all named by more than 25% of respondents. (For more on “being digital,” see our Cognizanti article “Making Digital Real and Rewarding.”)

But to move to the top of the digital leadership value chain, insurance CIOs must also embrace new approaches to work to achieve real business outcomes. These include the following: 

Become more strategically minded.

Compared with other industries, respondents were less apt to see themselves as digital strategists and transformational leaders. However, more than three-quarters (78%) recognize the need to move from an “improver” role to “influencer” and “transformer.” To do this, CIOs need to develop a sense of curiosity about how digital can enable new forms of value, and then share it, helping business leaders open their minds to the art of what’s possible. We advise CIOs to focus on only a handful of high-impact initiatives at a time and develop a compelling story around what these could accomplish. This way, they can both see digital in a more tangible and concrete way, as well as repeat the story to others.

Improve partnerships and collaboration capabilities.

CIOs need to become integral in ensuring that digital business outcomes are realized. This means partnering with the CXO team to create a digital roadmap, and enabling collaboration across cross-functional teams. It’s here that insurance CIOs have some work to do. When asked to rate the most important relationships with internal stakeholders, respondents named “the CIO team” as the top relationship (92%), higher than the CEO (86%), chief marketing officer (74%), chief operating officer (67%) or chief financial officer (47%). 

External partnerships are also crucial. A top barrier to digital disruption is “rapid innovation capabilities,” according to 45% of respondents (see Figure 1). The best way to surmount this challenge is to develop relationships with startups, niche vendors, industry experts and others, and using open application programming interfaces (APIs) and platforms for bolt-on innovation.

Embrace innovation.

Insurance CIOs do not yet see themselves as innovators, perhaps in response to working in an industry that depends heavily on “keeping the lights on.” CIOs need to begin actively noticing the changes in the world around them, particularly when it comes to what customers want and need, and how that might change over time, and prepare an adaptable technology ecosystem that can respond. An example is MetLife. When the CIO and his team recently a way to deliver a 360-degree view of customers for the call center, they developed what is known as The Wall: a new call center platform that looks, acts and feels like Facebook on the front end and incorporates a MongoDB NoSQL database on the back end, which is capable of integrating data from 70 different sources. The pilot – completed in two weeks – was well received and sealed IT’s reputation for innovation.

Hone analytics capabilities. 

Nearly half (49%) of respondents naming analytical insights as a key obstacle to enabling digital transformation. We believe CIOs have a unique appreciation for the volume and granularity of insurance data and that they can parlay this knowledge into developing strong data analysis capabilities within their organization. CIOs are also well positioned to help their organizations layer “systems of intelligence” on existing legacy systems to enable powerful engagement interfaces. 

Figure 1

Become the “chief talent officer.” 

Particularly in an industry not known for attracting digitally-oriented staff, attracting and retaining top-notch talent is the most important new role for insurance CIOs, according to 84% of respondents. CIOs need to take the initiative to find creative ways to fill the skills gaps created by the digital economy, rather than waiting for human resources to take care of it. (For more on creative ways to handle the talent gap in the digital era, see our white paper “People, Not Just Machines, Will Power Digital Innovation” and our Cognizanti article “Jumping on the Gig Economy.”)

While the list might seem daunting for many insurance CIOs, accustomed to a conservative, cautious environment, the change will be worth it. As one respondent said, “The digital disruption that has transformed sector after sector, from publishing to travel, has come to insurance. Even consumers today want a digital-savvy environment.”

For more details on our research findings,  read our whitepaper “How Insurance CIOs Can Remake Themselves to Lead Digital Transformation” and our overview report “Being Digital: How and Why CIOs Are Reinventing Themselves for a New Digital Era”. For more information, please visit our CIO Study page to view our industry specific reports, or the insurance section of our website.

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