Compiled by Dona Senara
THE ADVENT OF INSURTECH
Kasun Yatawara explains what fusion of technology and insurance signifies
Q: What is ‘insurtech’ – and in what ways is it shaping the insurance sector?
A: Insurtech is simply the result of insurance and technology coming together. It aims to increase efficiency, improve the customer experience, and streamline business models and processes in the insurance sector.
The element of technology in insurtech brings together concepts such as blockchain, AI and IoT to enable smart contracts.
Q: And what are the latest trends or innovations making a splash in the sector?
A: The global insurance sector shares with other businesses most of the technological trends that are disrupting other industries the world over at present.
What’s more, it is also affected by technologies that are relevant to certain industries only by way of having to insure them. The best example would probably be smart vehicles.
Blockchain is a technology that global insurance giants are looking at now, due to its ability to support aspects such as insuring rare high value items, anti-money laundering procedures, ‘know your customer’ verification enhancements, improved claims handling processes and so on.
‘Low code’ or ‘no code’ development too is becoming extremely popular among insurance businesses as it allows them to be flexible when responding to a rapidly changing market and diverse consumer behaviours.
With many insurers having to deal with complex legacy core systems, platforms that can separate the back end from the customer facing front end allow them to cater to dynamic consumer segments with ease – in terms of product offerings as well as user interface aspects.
AI is definitely trending in the insurance sector at the moment. The true application of artificial intelligence is effective with the right data and the insurance sector has moved to a place where it can harness this in the global context.
However, Sri Lanka has a long way to go for AI to disrupt its insurance sector in any significant way.
Hyper-personalisation is another emerging trend in the insurance sector. In a market where there’s an information overload, attracting user attention has become difficult and the only way to stand out from the competition is by ensuring that high levels of personalisation are offered in the most scalable way.
Q: What are some of the key considerations that insurance businesses in Sri Lanka need to focus on when driving digital transformation?
A: Three key factors can be listed as being the most important in driving digital transformation and they don’t apply to insurance businesses alone – they are relevant to all organisations, irrespective of the industry or sector.
The first step is to understand if the mandate for digital transformation emerges from the top levels of the organisation. It’s very easy for digital transformation to fail if one department alone is held responsible for its implementation.
For various reasons, digital transformation is tougher than most people imagine; and if there’s no executive sponsorship, the plan is bound to flounder when it’s in rough waters.
The second important factor is to assess the appetite of the organisation and its clients for digital transformation. One should not bite off more than one can chew!
Since the process of digital transformation can be expensive, businesses shouldn’t view it as a bottomless pit. Regular checks and adjustments are mandatory to ensure that organisations spend on areas that bring in returns.
The third very important consideration is the readiness of data. Data fuels the digital transformation process – it is the most critical ingredient needed to derive meaningful returns from digital transformation. In the absence of a data strategy, there won’t be one for digital transformation either.
Q: What are the toughest challenges faced by businesses in driving digital transformation – and what are some of the most underrated solutions or tactics that are usually overlooked by organisations?
A: The most common challenge faced by businesses during digital transformation is the loss of drive as a result of delayed returns.
This happens for two main reasons. The first is setting unrealistic expectations around digital deliverables – both in terms of delivery timelines and returns. And the best way to negate this is to be realistic and set the appropriate ambitions for initiatives by breaking down deliverables into smaller components.
It’s common for the ‘hype cycle mindset’ to kick in when discussing digital initiatives. However, organisational leadership needs to be pragmatic by understanding that multiple factors are at play.
A second major challenge is the lack of support from staff. This is normal as digital transformation makes most people and functions uncomfortable. It challenges existing work practices and induces fear among employees if it isn’t pursued properly.
Overcoming these challenges is the key to creating a safe space for employees to contribute through transparent leadership dialogue and ensuring that they become owners of the digital ecosystem.
This will allow them to challenge themselves and reinvent the way they work.