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Insurers must adapt to a digital world

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Insurers can leverage technology to improve performance and therefore should strive to become “digital firms” according to a new report from consulting firm McKinsey & Co.

“Digital firms leverage technologies such as mobile, social and cloud to make better decisions, automate processes, deepen their connection with customers, employees and intermediaries, and pursue profitable innovation, all at a rapid development pace,” McKinsey said in its new report, “The Making of a Digital Insurer: The Path to Enhanced Profitability, Lower Costs and Stronger Customer Loyalty,” released Wednesday.

Insurers can implement technology solutions at every stage of their business as insurers acclimate to an increasingly digital world, the report asserts.

“Today, insurance customers and clients' expectations have been shaped by their digital experiences with sophisticated companies in other sectors, such as Amazon and Uber. The digital bar for insurers is high and rising,” the McKinsey report said.

“By making progress in six key dimensions, insurers can both achieve significant immediate gains while paving the way for deeper, longer-term change. These dimensions are: strategy, customer-centricity, digitizing business processes, organization, technology, and analytics and decision-making,” the report said.

Insurers that can leverage digital tools along with core competencies such as underwriting discipline, claims execution and investment management savvy, “will be in a position to lead the industry,” the McKinsey report said.