How long it takes a technology to catch on with insurers can depend on several interrelated factors. These factors include how easy the technology is to deploy, how long it takes to develop expertise and understand its use cases, how much value it creates, and how apparent that value is.
Technologies that can be mapped onto existing processes often see the most rapid adoption. Robotic process automation is one example: It’s designed to replace human operation in an existing process, so it’s relatively straightforward to drop in. There’s no re-engineering required; the process just works more efficiently.
Not all new tools are so easily added to the current state, however. Some of the most powerful emerging technologies—ones that have the potential to create great value for insurers—may take years to understand or require new processes that touch multiple functions within the insurer.
It’s critical to recognize when this is the case and take the time to integrate these technologies properly. Insurers can sometimes fall into the trap of “paving the cow path.” That is, incorporating new technology into an existing process without changing it, limiting the impact that technology can create.
Core systems transformations are a good example. Often, existing processes include several steps that aren’t required elements of business operations. They exist as workarounds to accommodate legacy system limitations—things like data cleansing, validation, or re-entry of data—because existing systems aren’t or can’t be fully integrated. Recreating old workflows with new technology will reproduce these inefficiencies.
In other words, when it comes to new technologies, the mantra isn’t “keep processes the same to generate value quickly.” Rather, it’s “understand how your new tools are best used and use them in the best way.” Some new technology works well with existing processes and generates clear and immediate value. Others require re-imagination to create the most impact.
CIOs can emphasize this to communicate the value of a pilot program or prospective technology to business partners. Functional areas may need to learn new workflows, KPIs might need tweaking, or resources might have new tasks entirely. If your new AI-powered system can process simple risks straight-through, underwriters can focus exclusively on more complex applications.
It also means that vendors should focus on the value their solutions create, particularly when that value will be most clear from completely new processes. It’s important to help insurer partners understand how post-transformation will be different—and better.
It’s easy to focus on new capabilities when considering new technology. Still, it’s important to remember that “transformation” isn’t just about replacing systems: It can also be about completely changing the way business is done.
For more on emerging technology in insurance, see Novarica’s recent Research Council study.
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