I work with digital execs at global insurance firms that are in the throes of digital transformation. One of the top inquiries that I’ve received from our insurance clients is: What is the ROI of digital transformation?
The time has come for insurers to take a hard look at their digital investments to date. Globally, insurers have invested billions of dollars in digital transformation. Greater economic and regulatory uncertainty in 2020 will push digital execs to not only demonstrate the results from the projects that they have already implemented but also to explain how future initiatives will drive customer and business outcomes.
But digital execs continue to struggle to demonstrate the value of digital. Many depend too much on easy-to-track but inadequate metrics, such as app downloads or login frequency, to measure, validate, and justify their digital initiatives.
In 2020, execs who can’t or don’t link these initiatives to revenue and expenses will fall victim to stagnating or reduced budgets and may even risk their careers.
To secure budget for ongoing and future digital initiatives and confirm that digital investments are paying off, digital insurance execs must link digital investments to the financial metrics that matter to the C-suite and board. What does this mean to digital execs? Measure how digital insurance initiatives impact gross written premiums, gross earned premiums, investment income, reinsurance, claims, regulatory compliance, commissions, and underwriting.
Once the link between digital capabilities and customer and business metrics has been established, begin to map these digital capabilities to the customer lifecycle, the insurance value chain, and a technology stack.
Demonstrate how digital technologies:
- Improve product design, marketing and sales, service, and engagement.
- Lower the costs of underwriting, acquisition, service, and compliance.
To find out more about the framework that shows how digital fuels financial performance and the technology stack that digital insurance execs should build, read this report.
How digital success is measured will affect insurers’ profitability. Digital execs need to shift their thinking away from building front-end digital assets and take a more strategic view of their digital investments. After all, no digital strategy exists in isolation; it’s part of the corporate strategy. Digital execs need to transform how digital success is measured; the way they do this will determine whether the firm is poised for growth — or will even remain in business.