Did you know that, according to a McKinsey survey, 94 percent of executives aren’t satisfied with their firm's innovation performance? While this number may seem staggering, it’s reflective of the struggles many large, historic companies are facing in today’s market. Customers want things to be quicker, more personalized, and transparent. They’re expecting more from their insurance providers than they ever have before, and it falls on these incumbent insurers to rise to that expectation by becoming more customer centric. The question is, what’s standing in their way?
It isn’t want of an innovative solution. There are hundreds of insurtech technologies and providers out in the market, and over 90 percent of them feel partnering with an incumbent is critically important for them. So with this sentiment, and the variety of tech solutions available, it would appear the answer to that question is, nothing.
But that’s not the case. It boils down to the elephant in the room, the one thing incumbent insurers all have and struggle to address: entrenched legacy culture and systems.
The issues with legacy systems
One of the most difficult things about legacy systems is that there isn’t necessarily anything wrong with them, they’re just not cutting it anymore. Insurers use the same systems and processes today as they did a decade or two ago, and those systems are simply incapable of keeping up with the speed and variety of modern data.
The reason legacy systems are a problem now has to do with two things: customer centricity and the importance of data. Large insurance companies are sitting on all the data they need in order to create a more dynamic, personalized, and accessible experience for their customers, but the data is locked away in systems that make it difficult to take advantage of it.
According to a report by MarkLogic Corporation, 55 percent of insurers believe the complexity of their legacy systems is the key impediment to achieving a singular customer view. These systems also prevent insurers from properly categorizing and accessing their data, making it difficult to sort what is relevant or useful and near impossible to optimize their processes. It also means insurers aren’t able to leverage this data in order to stimulate growth and evolve in the market.
The issues with legacy cultures
Perhaps even more challenging than legacy systems, legacy cultures stand in the way of meaningful innovation by perpetuating routines and day-to-day communication that aren’t conducive to change.
Characteristics of legacy cultures include:
- A lack of diversity and inclusion
- A lack of cross-team collaboration or communication
- A reluctant attitude towards change or disruption
- Hesitancy towards trying things a new way
In order to address the industry-wide issue of attracting new talent, insurers must look within their own corporate structure and ask the question, ‘in what ways is our culture preventing us from recruiting talent and boosting innovation?’ It then falls to executives to begin to encourage and foster a culture that puts everyone on the same side and prioritizes innovation, inclusion, communication, cooperation, and a sharing of ideas that allows each employee to feel empowered and motivated to succeed.
By highlighting the role each individual plays in helping the overall company succeed, insurers can create a culture that encourages innovation, instead of discouraging it.
Ways to address the problem
In order to better serve customers and compete in today’s market, insurers need to address the legacy systems and cultures that prevent them from innovating to their full potential. The question is, how?
Changing legacy systems is expensive and time consuming. It can take years and cost millions to properly shift all the information and data insurers have to a new system. For some insurers, that process might feel overwhelming. There are, however a few other ways to begin addressing legacy systems:
- Partnering with insurtechs that offer solutions that address the key pain points caused by your outdated systems
- Finding insurtech solutions that can integrate with your existing systems to help them optimize your data and provide better insights and analytics
- Finding out your customers key issues and beginning to position your data and analytics to better reflect those priorities
When it comes to legacy culture, there are a number of ways to address inhibitors of change and innovation:
- Increase your diversity and inclusivity, beginning with the interview process
- Invest in your employees, make their emotional and mental well-being a priority to ensure a healthy work environment
- Encourage collaboration across teams
- Invest in an innovation team and run company wide workshops to encourage creativity and the sharing of ideas
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