This interesting take depicting a conversation between DXC Technology and its client, Mr Anshul Srivastav, CIO, Union Insurance Company P. S. C., highlights the role of cloud, digital transformation and its benefits as well as the outlook of the Middle East market.
How would you define “digital insurance” in the context of the insurance industry?
I see digital insurance as a prime-time shift in strategy to do business through technology. It involves the creation of new business models and processes, while continually improving existing ones. It means creating new value and pursuing continuous innovation for customers, partners, regulators, employees and the entire supply chain.
Digital insurance enables engagement and collaboration with customers and partners to enhance experience and manage real-time protection needs and requirements. It is about identifying new market opportunities to stay competitive, relevant, and it facilitates cost-effective distribution of products and services, while streamlining the processes to execute them. Digital insurance is a cultural shift in the entire ecosystem.
What role does cloud play in your overall digital transformation strategy?
Cloud lies at the core of an insurer’s digital transformation journey and offers a very powerful use case for on-demand services versus pay-per-use, which is a fundamental requirement for digital transformation. Over the years, organisations have suffered from high cost, inefficiencies, excess overheads and inflexibility to change their technology operations and infrastructure, and that is a deterrent to digital transformation.
Adoption of cloud will enable organisations to be more competitive and relevant. On-demand and computing capabilities will spur organisations to re-work their strategy around speed-to-market business opportunities, which could otherwise be lost. They will also support organisations in scalability and flexibility to roll out digital products as well as create and maintain digital assets.
Digital transformation requires enhanced security and peace of mind, and the solution lies in the cloud. Managed security services offered by cloud service providers are built on a layered approach of data protection and security, threat and security intelligence, access management and controls and encryption – and those too, as on-demand services. Business continuity is the most powerful attribute of cloud, as it helps organisations manage their availability anytime, anywhere. To be successful, organisations must redefine their respective business models and make cloud a key element of that.
The insurance market is undergoing tremendous change globally. What is your short-term and long-term outlook for the Middle East market?
Insurance as an industry is on the cusp of a major shift in the Middle East. The industry continues to mature rapidly due to changes in economic conditions and new regulations. Economic conditions are getting recrafted with low dependence on oil and creation of new economic frameworks to generate revenues. With the introduction of VAT (value-added tax) across member countries of the Gulf Cooperation Council, there will be a shift in business
models.
In the short term, the insurance industry should capitalise on opportunities arising from the infrastructure and other mega projects declared by the respective governments in the region. With subsidies and welfare schemes being taken off by some of these governments, it is a golden opportunity for insurers to build base life and protection products and build profitability around that. Incumbents should start their digitisation journey in the short term to manage overheads and costs.
Insurers must analyse and measure the cost of processes and distribution of products and services to build a strong business case for automation. Insurers must grow by controlling their cap-ex and op-ex budgets. With insurance penetration below 1% in a couple of countries in the Middle East, a long-term strategy needs to be articulated for reach and penetration.
Insurers should create products and services for all. Microinsurance will be one way to reach and customise per individual requirements. With so many players in the market, consolidation is required in the long term. Government schemes should be rolled out for everyone in the lower strata.
With life insurance penetration being the lowest among the global players, it needs special attention from incumbents to develop customised products on protection and pure risks. Insurance should be commoditised and regulations must be developed to reach the last mile. Auxiliary setups and industries will push the incumbents for a change and that will define their sustainability. With the advent of everything as a service, the “Uber-isation” of insurance is inevitable.
What stage of the digital journey is the industry currently in, and what are the challenges?
The insurance industry in the Middle East has commenced its journey to digital. The business is primarily B2B driven in the Middle East, and insurers are working to create an ecosystem to reach out to customers and partners digitally.
Many processes are getting digitised to optimise cost and expenses. InsurTechs have entered the market, with pure-play microinsurance players and online aggregators. Blockchain is making inroads in the insurance digital space, and artificial intelligence is being used to automate processes, while cloud is seen as a key driver to execute the digital strategy. VR and AR are being extensively considered for enhancing customer experience. IoT in the form of telematics and wearables is reshaping offerings and helping incumbents to mine and analyse data in real time. Insurers are leveraging analytics to develop new markets and to optimise processes.
In my view, some of the key challenges that insurers face today are complex distribution setups, a fragmented market, data management and subsequent intelligence on data as well as complex and redundant processes.
Given the pace of digital change and the challenges of moving complex organisations into the digital era, how do you remain agile and up-to-date regarding digital transformation?
Being agile in a fast-changing environment is key to driving digital transformation, as it will help insurers stay relevant and up-to-date in the face of continuous shifts in market dynamics.
Insurers must build and execute a digital transformation strategy that helps create scale and achieve optimisation. Digital transformation is a journey to stay relevant. It is a change management exercise that requires lot of grit and effort to create a culture and subsequently execute it.
What do you see as the key benefits of digital transformation? How are these best articulated to management for their buy-in?
Some key benefits of digital transformation are:
- Organisations will be much closer to the needs and requirements of the customers. They can engage with customers in real time to assist and support needs and growing expectations, building convenience and responsiveness for customers and distribution channels.
- Organisations can consolidate a lot of overheads on redundant operations by digitising them – such as self-service setups for customers, digitisation of customer and partner support processes to empower them, etc.
- Incumbents can achieve cost optimisation by re-working and re-articulating their respective business strategies around cost and develop cost-effective ways of transformation.
- A data-driven organisation will help incumbents develop new products and services, innovate, efficiencies (improve on silos) and increase agility.
For management to buy in, a few things need to be identified and articulated, namely:
- Vision of key stakeholders;
- Current and future stakes of an organisation;
- Potential for revenue growth and cost efficiencies;
- Improvement and impact on processes as well as customers;
- Clearly defined return on investment; and
- Agility to roll out and demonstrate a pilot of live business case.
What role does a technology partner play in a successful digital transformation?
Technology partners play a very crucial role in successful digital transformations by bringing in domain knowledge and technology expertise, and by helping to ramp up existing skill sets in the organisation.
They can support you in developing specific and pointed solutions, and they are in a position to implement solutions with best practices embedded. A trusted technology partner like DXC understands and can help accelerate our digital transformation strategy. Partners can create levers and drivers of change for digital transformation, and an ideal partner is one that collaborates with their client for mutual success. A
Mr Anshul Srivastav is a global technology leader who has been instrumental in driving technology transformations for businesses. He is the Chief Information Officer of Union Insurance (UAE, Oman and India), leading IT Strategy, Technology Transformations, Analytics, Software Delivery, Architecture and Cloud across all lines of business (Life, General (P&C) and Health Insurance). Established in 1998, Union Insurance provides a comprehensive range of retail and commercial insurance products to clients in the UAE and across the Middle East.