Helping insurers navigate transformational change

By Resolve Editor Kate Tilley

As the insurance industry undergoes radical transformational change, insurers must navigate a rocky pathway to achieve success.

Legislative and regulatory changes, fuelled by the findings of the financial services royal commission, have been a catalyst for broad changes across the life and general insurance sectors.

Insurers, brokers and underwriting agencies also are going through mergers and acquisitions, divesting or acquiring divisions, and introducing new IT systems and applications at a rapid pace.

Experts at Sydney-based management and technology consultancy Frazer Walker say clear communication and an open-minded approach to transformational change programs are fundamental to ensuring success and avoiding unplanned budget or operational outcomes.

Frazer Walker Principal Consultants Mark Partridge and Glenn Vade have overseen transformational change at major Australian and New Zealand insurance companies and offer tips on how to achieve the best outcomes.

Existing landmines

Mr Vade says it’s vital, when bringing two insurers or divisions together, to acknowledge that each has a different culture and the power ratio is never 50:50.

“Don’t go in with all guns blazing,” he says. “There may be existing landmines and an adversarial attitude could lead the people involved to not disclose them.”

He advises listening to personnel from both entities and considering the best outcome for the new entity. The solution may be a new IT system, rather than trying to merge two or pick the best from both.

“When managing transformational change, don’t automatically discard old technology – it may just need a better interface. Show empathy, as that always works in your favour, and you’re more likely to gain information that can help you see any potential red flags and discover the optimum solution,” Mr Vade says.

The IT team working on the merger must include representatives from both companies and be purely dedicated to the transformational change program.

Team members need to be empowered to step away from focusing on their day-to-day jobs. “You need open-minded people who can see the bigger picture and focus on the best outcome for the new entity, not protecting their patch,” Mr Vade says.

Personal accountability

A dedicated team, overseen by an independent, external consultant, can speed the process. Mr Vade says people can be precious about systems for which they have personal accountability, whereas an external adviser has no conscious or unconscious bias, so can objectively present the advantages and disadvantages of each potential approach.

Frazer Walker Principal Consultant Mark Partridge outlines four priorities for successful insurance company transformational change.

• Establish the program leadership and determine the key stakeholders
• Program organisation – establish the projects and activities required to execute the change
• Plan and prepare for delivering the change, then kick off the required projects and activities to achieve it
• Recognise that it may take several tranches to achieve the deliverables, so adjust the program structure according to the desired outcomes.

Mr Partridge identifies a key pitfall as failing to select the right leaders. “They need skin in the game and must be invested in the outcomes.”

His primary requirement is open communication. “Establish the strategy in a way the participants can clearly understand and interpret it. Consider how the transformational change program interacts with IT, risk management and other policies within the organisation.”

‘Be disruptive’

Mr Vade urges insurers to adopt change readily. “Be disruptive. Insurance is changing rapidly and there’s the potential for many companies to be left behind.”

Both say there are game-changing opportunities through using machine learning, artificial intelligence and other technologies to learn more about the data insurers hold and to enable it to build better business outcomes.

“Insurers without a sound knowledge of implementing transformational change will become dinosaurs as nimble disruptors use technology to their advantage,” he says.

“However, it is important to remember that, while technology provides the tools to leverage change, people – the human factor – are at the heart of any change.”

A detailed article on transformational change for insurers is on the Frazer Walker website.