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Digital revolution needs digital natives

Digital revolution needs digital natives

The human and personnel challenges of the technology revolution sweeping through the insurance industry may be as daunting or more so than the software and hardware, according to industry observers.

Insurers, brokers and others, however, may be encouraged by the fact that younger professionals, the millennials or “digital natives,” should help usher in the revolution, as will lessons from personal lines and other industries and business.

“In our discussions with insurance executives, we realized that the human dimension of the digital transformation is becoming equally important if not more important than the technological one,” said Henrik Naujoks, a partner in management consulting firm Bain & Co.’s Zurich office.

The challenge on the human resources side is substantial and was initially underestimated two to four years ago when digital transformation was primarily seen as a technological hurdle, Mr. Naujoks said.

“It’s not just technology that has to change, it’s a true process transformation within insurance organizations,” said Christopher G. McDaniel, president of The Institutes RiskBlock Alliance, based in Malvern, Pennsylvania.

“One of the things we’ve been looking at is that the workforce is going to change in the insurance industry,” said Patrick Schmid, vice president of RiskBlock.

A changing work force may help propel the insurance industry forward technologically as more tech-savvy employees enter the workforce with their own norms and expectations, according to Mr. Naujoks.

“Obviously the young people help, and a younger workforce will definitely help to foster the digital transformation,” Mr. Naujoks said. “Often the more junior, younger employees don’t need to be convinced.

They bring it with them, and they’re definitely accelerators.” Insurers must think not only of retaining end customers using technology, they must also consider their partners in the insurance buying process, said Darcy Dague, managing director in Accenture PLC’s insurance practice in Chicago.

“The new generation of brokers and agents are starting to demand new and simple ways to write business,” she said.

“Even for the areas which are highly customized and still require a lot of hand holding, you need technology solutions at par with the demographic you are serving,” which in this case is the brokers and not the end consumer, Ms. Dauge said.

Agents and brokers influence insurers and the way they think about technology, Ms. Dague said.

“We’re starting to see a larger drive with the digital natives as they become the core sellers from an agent and broker perspective, and I think that is a much bigger driver for some of the larger carriers.” If insurers want to keep business with the agents and brokers, they must get their technology up to par, Ms. Dague said.

The workforce revolution will help enable this, sources said.

“There is no need to convince the digital natives about the need to digitize,” Mr. Naujoks said. “They have grown up using technology, and it is often intuitive to them.”

The technological progress insurers’ have made with personal lines businesses and their customers familiarity with technology might help with commercial lines technology adoption.

“We have several commercial lines applications that we are working on for next year that are extensions of what we originally did in personal lines,” Mr. McDaniel said.

For example, the Institutes is working with a large logistics company on insurance verification for trucking loads, which is a time-consuming manual process, Mr. McDaniel said. “We created a proof of insurance already in personal lines which we are porting over to commercial to be used with a mobile device.”

Indeed, personal lines clients may also be small business owners.

For “the vast market of small business owners, what they see in their personal life experience really bleeds over into how they want to buy insurance for their small business,” Ms. Dague said. “I think there’s a big correlation between that personal lines experience and that small business owner.”

Insurers will, however, retain their core functions even as they adopt new ways of executing.

“The fundamental definition of understanding risk and assessing risk, of managing capital and deploying capital, I do not think that changes,” said Andrew Breen, senior vice president of digital for Argo Group International Holdings Ltd. in New York. “I think the tools we employ to do those two things will change.”

“The concept of insurance is not much different today than it was 100 years ago and likely will be not be much different 100 years from today,” said Tony Kuczinski, president and CEO of Munich Reinsurance America Inc. in Princeton, New Jersey. “But how we deliver that is clearly something that will change with the times.”

Insurers will still take on risks and provide services and advice, but they will require better data and technology to perform those functions, Mr. Kuczinski said.

“I think roles evolve,” Mr. Kuczinski said. “Our job is to adapt to the new roles needed.”




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