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Where did the finish line go? Digital Transformation in Life Insurance

Are life insurers chasing digital transformation or iterating with purpose?

Remember the good old days, when every aspect of a project was mapped out in detail well in advance? Well if all went well, a point would come when you could turn and point to a new product, and say, there, all done… let’s celebrate.

Now, we may be experiencing a turning point, in which the all-encompassing Big Bang modernization project with a distant but well-defined finish line has been made redundant.

But what is replacing that traditional approach?

In a recent Life Accelerated podcast, Insurance Innovation Reporter’s Anthony O’Donnell sat down with Brian Poppe, Chief Data Officer at Mutual of Omaha, and Kim Pfiffner, CIO of US Insurance Solutions at Principle, to discuss how IT at life insurance carriers has changed. What he uncovered were new ideas about development, about organization and about how we’ve recalibrated our expectations of how fast a goal can be accomplished.

The nature of teams has changed. So have the processes that guide how they work together.

Everything has changed in the last few years. Customer expectations are continually shifting. The pandemic forced us apart and made us find new ways of working and building. And technology has evolved alongside the processes we’ve created to speed up development.

The velocity of life insurance business is accelerating. And, as a result, projects and teams are getting fragmented, then reforming in ways never seen before.

The all-encompassing Big Bang project has been made redundant. What replaced it, according to Kim Pfiffner, is the iterative generation of smaller products created in sprints that reduce risk and go live faster. And, more than ever, customers, distribution partners, and internal users are now becoming essential parts of those dynamic initiatives.

“Be willing to say to a distribution partner, ‘Would you be part of our pilot as we're rolling this out?’ Get their feedback early and often, versus waiting, and hoping that you've managed the risk appropriately. I think it reduces risk to the organization tremendously and creates a much better customer experience.”

‒Kim Pfiffner, CIO of US Insurance Solutions at Principal

Given the rate at which customer needs are evolving, involving representatives of all stakeholder groups in your development process is critical to project success. If you don’t have teams positioned to be listening for their feedback, then you’re going to lose touch and become less relevant.

There’s always a next thing. And there’s always a team working on it

In recent years, development projects have changed from traditional monolithic implementations to smaller initiatives focused on creating Minimum Viable Products (MVP) with more targeted, smaller goals.

And each of these projects is a milestone in a larger effort to achieve bigger long-term business objectives, like enhancing CX or making the shift to a data-driven organization. The strategies and requirements that drive progress towards these larger goals will shift over time as customer needs evolve. And so, they are never really finished. The iterative projects keep on coming.

How do you break this problem down into something that I can deliver as quickly as possible?

In response to the changing development landscape, many companies have embarked on a journey to change the mindset of both the IT and business staff involved in these new kinds of projects. For the IT side it means recognizing that they don’t need all the requirements defined up front. They need to know enough about the problem they’re trying to solve and what the strategy is for doing that, but not every single detail. And on the business side, they need to get comfortable with the reality that phase 1 will be delivered and it’s their chance to provide feedback and ask for improvements that will appear in the next phase.

That kind of understanding enables a process in which you can break a problem down into more granular targets that can be delivered much more quickly than traditionally expected. The key to the success of the overall process is to then incorporate learnings from the first effort, make adjustments to the plan, and deliver on the new direction quickly.

“There's always going to be another thing. There's a team that's dedicated to making underwriting better or claims better or making the application process for customers better. So, you don't need to dump all of the requirements on those teams on day one. Give them the minimum required necessary, watch them build, and then it's like, oh, the team is gonna be interested in saying, ‘Well, we learned that customers freeze up on this particular question for whatever reason. So, let's find a way to either ask that question differently or break it apart into two questions or solve that problem.’”

‒Brian Poppe, SVP of Income and Wealth Planning, Mutual of Omaha

Wrap up

Digital transformation is a process not an event. It’s not the project to implement a new self-service portal. It’s the larger ongoing initiative to transform into a data driven, automated and scalable life insurer. And when a company plans how they will address those larger digitalization goals, it leads to a new way of thinking about how teams are organized, how they work together and what they build. The development environment itself becomes an ecosystem in which resources come together and connect to achieve small goals that roll up into a transformation that will power sustained CX improvement and business growth for the next generation.

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