Miracles Happen Elsewhere: Why Digitisation & Automation in Reinsurance Are Not Overnight Endeavours

There is a lot happening in the news lately regarding partnerships between reinsurance and software companies.

This, of course, is fantastic in terms of modernising the reinsurance sector and providing reinsurance cedents with digitised and automated solutions to improve tasks such as finding the best market rates for reinsurance protection.

Nevertheless, it seems an equally important time to talk about the caution one must take when implementing such new technologies - it’s tempting to carry out the change instantaneously, what with all the benefits it can provide. But, as fantastic as a well-implemented transition to high-quality, modern software for any reinsurance company can be, we mustn’t forget that digitisation and automation are certainly not overnight endeavours - let’s explore in more detail why that might be...

Rushing the process leaves room for discrepancies

As mentioned above, instantaneously implementing new technologies can be very tempting when they promise so much improvement for the reinsurance business. Don’t let me be misunderstood - I agree, they provide many benefits, but the problem here is the inclination to rush.

A company may try to hurry their digitisation process for many reasons - time constraints, imminent external pressures or, as Michael Spires for CIO expresses, adopting the “we’ve got a crisis and we responded” attitude.

The issue here is that the long term is not being considered and the implications of this will outweigh any benefits that fast implementation provides in the short term. Whatfix states that businesses who rush their digitisation endeavours cut corners on some of the critical steps required to switch to different IT solutions, leading to vital processes being overlooked, clumsy mistakes being made and impeding successful migration to the new platform.

Fast implementation doesn’t benefit employees

Rushing into anything can feel overwhelming and sudden at the best of times. Hence, in a modern world where insurance professionals are now increasingly required to work alongside tech, it is understandable that, to some degree, personnel may feel threatened by the sudden implementation of AI and ML into their workplace. Insurance Business acknowledges that while the reality is that digitisation and automation provide many exciting opportunities and efficiencies for re/insurance workers, fast implementation masks these opportunities and make them seem more like threats of displacement for workers.

The consequence of this? Put simply, reinsurance employees (and their clients!) will resist using the new software. Fast implementation does not allow for an adequate change narrative, as McKinsey puts it, to be carried out meaning that employees are less likely to be supported, trained or informed of the benefits of working with the new system and therefore, won’t use it to its full potential.

Rushing digitisation leaves no time to consider the ‘why’

Lastly, it must be noted that statistics surrounding business digitisation efforts have not been promising thus far. Take the McKinsey study from last year, for example, which revealed that as many as 70% of digital transformations fail. Through all the articles and studies I’ve read, one recurring theme between many, if not all -  is that companies do not have a clear, compatible or achievable goal in mind.

I would argue that the importance of finding the ‘why’ of digitisation for your reinsurance business trumps all other transformational concerns.

Technology without a clear purpose does not deliver benefits and instead incurs wasted resources. Rushing into a system or platform without proper consideration can be costly in reinsurance, especially in OPS, where things are for the long run and change is not something that comes about as regularly as in departments like marketing and sales. Once a contract is bound, it's put into execution mode for many years to come so one must be sure of the platform that such a contract will be conducted in - will it still be efficient and relevant 5, 10 years down the line?

Thus, it is the ‘why’ that drives the ‘what’ which drives the ‘how’ and THIS is where your reinsurance company will succeed in its digitisation endeavours. Needless to say, this process takes time but, as Imaginovation Insider highlights, having a holistic view of what ‘digital’ will look like at your company helps to connect it to your broader business goals, which in turn keeps employees and clients on board, leads to better change management and a smoother transition to new software and processes all round.

If you have any further questions about successfully implementing a digitisation strategy at your reinsurance company, contact me.