Transformation: navigating change and reaping the benefits

In this first instalment of a two-part interview with OIP president and CEO Martina Seferovic, we learn how to confront and successfully address concerns about transformation to facilitate much-needed further modernisation in the E&S sector.

Most would agree that the E&S sector needs to continue to modernise but, for some, ‘transformation’ is seen as a dirty word. Why do you think this is?

‘Transformation’ is seen as a dirty word. But many confuse ‘transformation’ with ‘change’. Change is a sign of growth, and even though it may sometimes be uncomfortable, it is necessary.

Right now people in the industry are scared of technology transformation, and that fear is amplified by unsuccessful transitions. The main reason for this is that processes are not being understood and assessed properly – when you try to implement technology on a faulty process, it is destined to fail. To make things worse, people who have no domain knowledge are tapping into the insurance industry and offering off-the-shelf solutions that often do not work.

Part of the reason there is resistance to change or transformation is that it takes time. Some of the most successful transformations are carried out incrementally.

We talk about technology transformation with the people in our industry to raise awareness of how it’s a good thing, and imperative to stay competitive and maintain profitability and focus on a healthy book of business.

  1. When embarking on the journey of technology transition and process automation, selecting a partner who truly grasps the essence of your business is crucial. Industry expertise is not just a bonus; it's a necessity for crafting technology solutions that genuinely align with your unique business needs and deliver the anticipated advantages.
  2. As you search for the right technology ally, prioritise those who can demystify the complex world of tech with clear, layman's terms. A good partner should effortlessly articulate the specific benefits their technology will bring to your business.
  3. They need to do more than just understand your business; they should delve deep into your processes and procedures, offering insightful recommendations to refine and prepare them for a seamless transition.
  4. Look for a partner who speaks your language, and who can navigate the intricacies of the policy lifecycle as fluently as you do. Their ability to quickly and accurately grasp your needs, coupled with their proficiency in industry lingo, is a true marker of a partner well-equipped to guide you toward a successful technological transformation.

Where do you see the biggest need or demand from brokers, carriers, MGAs, TPAs and other participants for technology and transformation?

This starts with ‘why’. We all want:

  • Increased bottom line
  • Customer satisfaction and retention
  • More time to focus on existing relationships and build new ones
  • Better predictive analytics
  • Enhanced workflows
  • Gained efficiencies
  • Speed to market

I see data and analytics as the future of insurance underwriting, and a solution to all the above challenges transferred to goals.

Traditionally carriers were the ones owning data. However, they own policy information, claims and payments. Now most others in the cycle have realised its value and are starting to take action. Everybody in the value chain below has access to not just submission-level data, but risk-level data which shows beyond written policies info. It gives them the ability to collect more information and the power to utilise that data to analyse missed opportunities and identify new markets, and new lines of business to write and develop a new specialty.

How important is understanding and assessing processes before implementing technological change and where do people slip up in this?

It is paramount, as most modern businesses tend to hastily adopt immediate solutions to fix problems while overlooking the root cause. Such quick fixes offer temporary relief but lack the longevity and transformative power needed for sustained success.

Before being automated, the process should be cleaned up and optimised for maximum performances and results. If you automate faulty processes you will get the same bad results multiplied by the speed of automation.

In other words, you should take the non-technological steps to try and improve those results before applying technological change.

For example, you could ask yourself, “What can I, as an individual or an organisation, do to make better underwriting decisions and improve underwriting profits?” To single out a few very simple things:

  • Hire qualified staff, onshore or offshore
  • Understand what is in the books – am I writing what I think I am?
  • Utilise data, make better predictions and identify missed opportunities
  • Importance of proper data collection and storage as well as analysis to be able to develop predictive models using machine learning and statistical techniques. Once the risk assessment is done, we can talk about missed opportunities. We learn from them and make strategic decisions and then rinse and repeat

What is also important is that understanding both process and technology is vital when selecting a transformation partner. Teaming up with someone who lacks expertise in either area could end up being costly. Essentially, you might find yourself paying twice: first for the initial solution that is being implemented and then again to rectify its shortcomings. Selecting a partner skilled in both domains ensures a streamlined, cost-effective solution without the need for costly do-overs.

What do companies need to be aware of to avoid these issues?

Technology solutions, if not carefully managed, can impede rather than improve an organisation's agility in responding to business changes. The search for a "silver bullet" technology solution often leads to overinvestment in unnecessary features, overlooking the reality that no single solution fits all organisational needs.

Successful technology integration requires alignment with an organisation's broader objectives and a preliminary analysis to identify truly necessary functionalities. Many companies make the mistake of mapping excessive data without discerning its relevance, complicating implementation and risking data inaccuracies.

Adopting the 70-20-10 rule for resource allocation – 70 percent to core operations, 20 percent to related opportunities, and 10 percent to transformative initiatives – can guide effective technology investment. This strategy emphasises that a focused 10 percent investment in well-planned technological transformation can significantly enhance overall performance, underscoring the importance of strategic planning and alignment in technology adoption.