Insurance companies face both changing demands from customers and an increasingly fractured and competitive landscape. They need to be able to use data and knowledge quickly and effectively to stay ahead. During the COVID-19 crisis, it has become clear that the sector needs to speed up transformation to support employees, protect customers and ensure profitability. I caught up with Pedro Peleja, Technology Transformation Director at Una Seguros, to talk about digital transformation during a pandemic.
Pedro, what are the main challenges to digital transformation in insurance, and how are you addressing them?
Most insurance companies have their core systems based in old technologies, but what we have been observing as a market trend is a big number of companies choosing the easiest way to deliver digital transformation – launching a new portal, or adding some tools like chatbots, without touching the core systems. However, I think that’s a mistake. There is a huge opportunity to reorganize the IT architecture from the base systems to the business support channels. Only then can we use analytics and artificial intelligence to build for the future – effectively moving from technology transformation to digital transformation of the whole business.
Digital transformation requires cultural changes, new skills and changes to existing processes. How is Una Seguros approaching that?
It is essential to remember that digital transformation is much more than just changing IT. When a company launches a transformation program, it needs to involve all the business areas from the beginning to redesign their processes. At Una Seguros, we started the transformation program with a 12-month setup phase. We redesigned the IT architecture and selected new technologies. We also took a detailed look at the business processes and redesigned them to align with the new company strategy.
It is only with such preparation that it is possible to face the implementation road map with a strong alignment between IT and business. During the implementation phase, the focus should be on the fieldwork within each business area to assure the practical integration of new processes and culture, using the opportunity to create new dynamics and competencies. In the final consolidation phase, we plan to spend time on data exploration and analytical tools, but first we need to make sure our processes and data are in good shape.
COVID-19 is having a huge impact on businesses in many ways. For example, there is an increase in digital channel usage, but the lockdown has also highlighted how many core processes are manual. Do you think the pandemic will speed up digital transformation of insurers?
It will certainly have an effect. This is the first time that any of us have experienced anything like social distancing. We are all having to find ways to deal with new situations, every single day. This has had a particular impact on companies that had not yet started digital transformation. Some process automation and paperwork reduction might have been planned, but suddenly everyone is having to do it. At Una Seguros, we actually had a strategic project to move to a paperless approach as part of our digital transformation strategy.
I think there are two ways of looking at the pandemic: either as a problem to manage or as an opportunity. Companies need to start with the basics: going paperless and automating processes. Then they can start to identify opportunities to launch new products and services to support customers in the future.
The response to COVID-19 suggests that there will be more use of digital channels in the future. Do you think there is still space for sales teams, agents and consultants?
I think there is very much space for a human "sales network." We know that it became usual to have new customers prefer self-service products, like car, house or travel insurance, that anyone can buy on the internet. Regardless of this preference, I consider that for any type of insurance products, from the simpler to the more complex, it remains important to have a specialized consultant to help on the selection of the product that best suits the customer, or on the other side, to help manage a claim if necessary. Insurance companies can and should be ready for these two markets and use different channels for them while privileging the agent network and specialized consultants to be able to better serve customers' needs.
How do you see people working effectively with AI application and automation in the future?
I think we will see some big changes in some functions in traditional insurance, especially those that have not changed in the last 20 years. The market trend in our sector is revealing that with the beginning of process and back-office activities automation, there has been the need to reallocate people to new areas where they will add value, where machines cannot contribute. I think we need to invest in tools and training. Companies will need more data analysis to look at customer behaviour and provide better product offers. It will also be necessary to enhance the expertise of those back-office workers, because they know the business and can teach the algorithms to operate most efficiently.