The hurdles that stand in the way of digital transformation in insurance may sometimes feel insurmountable, but they shouldn't.

As consumers, we expect our technology to adapt and evolve.

It's these expectations that are driving the digital transformation.

Digital transformation involves the adoption of new processes and models to accommodate emerging technologies and improve productivity and the customer experience. A large focus for insurance and finance businesses of all kinds, the hurdles that stand in the way of technology adoption can feel insurmountable.

Insurance carriers feel the pressure

According to a study conducted by Ensono and Forrester, more than a third of carriers credit rising customer expectations as the cause for their digital transformation plans, and 99% are facing cost difficulties in doing so.

But digital transformation is required of any modern organization, and there are some measures organizations can take to ease the difficulties, alleviate costs, and move toward smoother processes and smarter infrastructure.

Digital transformation barriers

The ease with which many talk about digital transformation is different than the actual process of implementing it. It is no simple task, and insurers face resource and process challenges throughout.

Seventy percent of the insurance industry is on a digital transformation journey, and everyone is feeling the burden of it, particularly in the following areas:

Experience — Overhauling your infrastructure is hard enough, but the struggle to provide a high-quality experience to everyone the product touches adds to the challenge. It's important to keep in mind this includes more than just the end customer, but also agents, brokers, compliance and legal teams.

Legacy portals overwhelm insurers with data without letting them easily extract actionable insights about what their customers seek. The migration of this data to newer infrastructure renders it even more perplexing while in transit. The agent experience also suffers when they are forced to learn the ins and outs of a new agent portal after being comfortable with a legacy one, especially as the kinks in a new one are worked out.

Security — A full 100% of insurers surveyed by Ensono face issues with security when distributing data and accessing it in legacy systems. Many insurers are lacking expertise with advanced analytics and managing modern database platforms.

With the prevalence of data breaches in our digital world and the resulting impact on business reputation, stolen customer data is the last thing an insurer wants on its plate during a major digital transition. Insurers hold onto an enormous trove of customer data, making faulty security a major threat when restructuring legacy systems. After all, data is most vulnerable when on the move.

Cost — As cited, price is also a huge hurdle on the way to digital transformation. While scaling the needed systems to become more advanced, the software license and maintenance costs also climb significantly, especially when you're forced to lock into long-term contracts.

IT talent also comes at a high price, considering the general skills gap and the drastic mainframe skills gap. Many insurers' systems exist on legacy environments like mainframes. Millennial IT talent is largely skipping over mainframe careers thanks to a lack of exposure to mainframes and their language – COBOL – during their education. This makes it difficult for many, in-house IT teams to recruit the talent needed to help insurers move over from legacy environments to more advanced cloud-based applications.

Communication — When moving off legacy systems, standardizing KPIs across multiple independent departments and managing the tension of change – internally and among agents – is trying. A shift in IT strategy affects everyone touching the organization. Keeping everyone looped into the progress of new changes is essential.

Breaking down barriers

Insurers have relied on legacy technologies for decades, but we've reached a point where they are now holding the industry back. Clearly the hurdles are abundant, but they're not impossible to scale, especially not when insurers have the right help and understand what elements to prioritize. Insurers looking for direction in their digital transformation journey should keep these insights top of mind:

Prioritize agent loyalty — As firms increasingly go all-digital, it can be tough to know where to begin when transforming your own infrastructure. Agent loyalty should be the top priority. Agents are the closest link to the end customer, and service speed and quality is of utmost importance to them. If they're not getting that from your carrier systems, they'll seek out a different one with a smoother experience.
Invest in your analytics — Data is insurers' most valuable asset. By pulling actionable insights from their data, insurers can better understand the needs of agents and customers. Having that insight helps to create a path for the business on its digital transformation journey to ensure it's investing in the areas that matter most to its stakeholders. But getting what you need from your data demands a very specific skill set. If you're not finding the correct talent, turning to a third-party solution can help to fill your analytics capabilities gap while keeping the data secure.
Seek outside assistance — From licensing expertise to managed cloud service to consulting services, bringing in outside skills and perspectives can do wonders for the transition to highly digital processes. Seventy-eight percent of insurers have roped in at least one outside service to assist with their digital transformation journey. This high demand for outside services indicates that insurers recognize the need for due diligence in reaching a new level of digital functioning in an advanced insurance world.

There's no denying the benefits of digital transformation. Insurers understand that, and are forging ahead with innovating their legacy infrastructure. Along the way, they are open to admitting their struggles.

Agents and end customers demand a new level of digital service and experience, and they expect the transition to be seamless. By remaining open about the barriers they face and seeking the right assistance from outside experts in IT management, insurers responsibly set an example for others to reach the new standard.

Brian Klingbeil is executive vice president of Technology and Strategy at the IT solutions company Ensono as well as a member of the company's board of directors. To reach this contributor, please message Bridget Devine at bridget.devine@walkersands.com.

The opinions expressed here are the writer's own.

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