Digital Transformation in Insurance · 2019-09-06 · is proprietary to Gartner, Inc. and/or its affiliates and is for the sole internal use of the intended recipients. Because this

© 2019 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This presentation, including all supporting materials, is proprietary to Gartner, Inc. and/or its affiliates and is for the sole internal use of the intended recipients. Because this presentation may contain information that is confidential, proprietary or otherwise legally protected, it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.

Juergen WeissPractice Vice PresidentGartner Research & Advisory

Digital Transformation in InsuranceAMIS Convención de Aseguradores

May 15, 2019

1 © 2019 Gartner, Inc. and/or its affiliates. All rights reserved.

Digital Giants Dwarf Financial Services…

Source: Forbes 2000 (2018),Gartner calculations

26%22%

Percentage ofFSI Companiesin Forbes Top 20

2006 2018

53%

7%

Percentage ofDigital Giantsin Forbes Top 20

2006 2018


…And Incumbents Feel (Fear) the Impact

2%5%

7%

25%

15%

5%

13%

18%

10%

OtherCreatesignificant

opportunities forincumbents

Causeexistentialthreats to

incumbents

Causesignificant

difficulties forincumbents

Minor impactson incumbents

No impact onincumbents

Will changehow investor's

view ourindustry

Activities inother industrieswill have a halo

effect on ourindustry

No significantimpact

Impact on Industries Impact on Incumbents

“Digital Giants will be in Our Industry”: 57%

Source: Gartner CEO Survey (2019), N=96


Key Issues

1. What’s the State of Digital Business in Insurance?

2. Which are the Challenges and Risks for Digital Transformation?

3. How can Business and IT Leaders Support Digital Business?


Top 10 Priorities for Insurance CIOs Dictate…

Priority Focus Area1 Digital2 Revenue/Business Growth3 Customer Experience4 Business Model Change5 Operational Excellence6 Modernization of Legacy Systems7 Data and Analytics8 Automation9 Corporate Merger & Acquisition Activity10 New Products and Services

Source: Gartner CIO Survey (2019, N=138), Q: What would you say is your organization’s top priority for 2018 and 2019?


… Investments Across the Insurance Value Chain

77%

57%

54%

50%

46%

45%

42%

35%

34%

32%

4%

4%

7%

5%

8%

6%

11%

18%

6%

6%

Customer service

Product development

Claims management

Sales

Underwriting

Marketing

Policy issuance and administration

Operations

Quotations management

Pricing

Percent of respondents increasing investment

Percentage of respondents decreasing investment

Source: Gartner CIO Survey (2019, N=100), Q: To which degree do you expect your organization's IT spending to change across these insurance value chain areas from 2018 to 2019?


There Seems to be Digital Progress …

1%

Source: Gartner CIO Surveys (2017-2019), N=151-168), Q: Which of these best describes the stage of your organization's digital initiative - i.e., your organization's digitalization efforts?

Ambition Design Deliver Scale Refine No Initiative

-24% -3%

216%46%

-30%


But the Insurance Industry Seems to be Stagnant

Making digital an integral part of business strategy and planning

Harvesting results from digitalization

Very Inefficient* Very efficient*

18%

2017 2018 2019

18% 20%

11% 11% 12%

10%

2017 2018 2019

12% 5%

21% 20% 17%

*Bottom/top 2

Source: Gartner CIO Surveys (2017-2019), N=151-170), Q: How effective is your organization in…?


Insurers Focus on Business Optimization

57%47% 50% 47%

33%

Improveemployee

productivity

Increaseexisting

revenue/value

Create bettercustomer

experience

Deliver entirelynew, digitally-enabled

products/services

Create new business/operating/

service models

83% Optimization 60% Transformation

My organization is focused on digital business in order to ...

Source: Gartner (2017), N = 30/151


Key Issues





Primary Inhibitors for Digital Transformation

What do you think is your organization's biggest barrier to move from the initial phases of digital

business transformation to scale (top 3)?

Source: Gartner (2017), N=111

Culture

43%23%

13%

Talent Resources


Digital Dexterity - Ambition and Ability to Apply Technology to Improve Business Outcomes

Ambition to WorkDigitally

Ambition to BuildDigital Businesses

Ability to Work Digitally

Ability to Build Digital Businesses


Digital Dexterity Matters

The Payoff From Digital DexterityLikelihood of Accelerating Digital Business Transformation

Source: Gartner (2018), N = 3,481 employees from all industries and functions.Assessed in terms of ability to gain value from digital initiatives, speed to launch digital initiatives and speed to complete digital initiatives

1.0x

3.3x

0

1

2

3

4

Moderate Digital Dexterity High Digital Dexterity

Percentage of Respondents Exhibiting High Digital Dexterity inFinancial Services:

11.1%

Source: Gartner (2018), N=342


Insurers are Stuck With Legacy IT Systems

Source: Swiss Re Sigma/own calculations (2018)

25,37433,118

42,47552,632 60,789

69,12879,221

88,75997,726

107,502116,168

126,163136,475

Mill

ion

USD

Global Development of IT Budget Mix and IT Debt between 2005 and 2017 (in million USD)

RunGrowTransformCumulative IT Debt

Insurers Accumulated Globally More Than 136 billion USD of IT Debt Since 2005…


25%Reactive — slow

decisions, localized, ad hoc response to

business demands or initiatives seen in

the market.

30%

Active — teams and LoB share best practices and approaches. Locally funded initiatives with strategic focus as a mainstream market response.

23%

Defined — innovation watch involves external resources. Teams funded and

sustainable. Processes and tools/methodologies are formalized and

shared. Active executive support/participation.

15%

Performing — strategic partnerships contribute ideas and resources. Expert innovation and catalyst teams. Best-in-class processes and tools/methodologies. Planned and funded, championed at enterprise level.

Pervasive — world-class leader/pioneer in innovation methods and practices. Expansive, open-innovation and co-development

programs. Multiple high-functioning enterprise and distributed teams. Pervasive culture of innovation. Core competency

integral to all business activities.

7%

Source: Gartner (2016), n = 60

Organization Levels of Innovation Maturity Are Rather Low


IT Has an Execution Problem

30%46%

Business Maturity IT Maturity

Source: Gartner Digital Maturity Assessment (2019), N=141

100%


Key Issues





AI and Analytics are Game Changer Technologies

32%

32%

11%

8%

7%

6%

4%

4%

4%

3%

1%

1%

1%

1%

Artificial intelligence-machine learning

Data analytics (including predictive analytics)

Digital Transformation

Cloud (including XaaS)

RPA

Blockchain

Internet of Things

Business Intelligence

Mobile (including 5G)

Automation

CRM

Cyber security

APIs

Autonomous Vehicles

Source: Gartner CIO Survey (2019, N=142), Q: Which technology area do you expect will be a game changer for your organization?


1. What is being measured?

2. Where are we today?

3. What is our target goal?

4. What is our desired outcome /

benefit?

5. What is our balance point?

Develop the Right Set of Digital KPIs

60%2025Goal

(3)

27%Today (2)

Percentage of insuranceinteractions that are virtualor digital (1)

2-5% bettercustomeroutcomes (4)

Reducedcustomersatisfaction (5)

Digital customerinteractions


The Predominant Business Ecosystem Style Has Been Linear …

Linear Value Chain

Enterprise


… But Now There Are New Ecosystem Styles

Linear Value Chain

Enterprise

New!Platform-Led

(aka multisided)

Enterprise

New!Decentralized

Enterprise


The Digital Business Technology Platform

Customers

Data

Things Employees

Partners

Data & Analytics Platform


Future Proof: From Digital Optimization …

Customers

Things Employees

PartnersCustomer Experience Platform

MultichannelCustomerPlatform

IoT Platform

Ecosystems Platform

Service-BasedCore Insurance Platform

Information System Platform

Customer Analytics



… to Digital Business

Things

Customers

Employees

Partners

Shareconomy


APIManagement

Ridesharing

RoadAssistance

LoyaltyMgmt.

Startups

Third-PartyServices


From Technology Platform to Platform Business

Digital Platform

Other Ecosystems

E-MarketplaceNo Platform

MatchingCollaboration

Platform Business

Orchestration Creation


Recommended Gartner Research

2019 CIO Agenda: An Insurance PerspectiveKimberly Harris-Ferrante (G00384051)

Why Insurance CIOs Need a Digital Business Platform RoadmapKimberly Harris-Ferrante, Juergen Weiss (G00368741)

Measure Your Digital Progress Using Key Performance Indicators for Insurance CompaniesJuergen Weiss (G00355499)

Toolkit: Understanding the Individual, Team and Leadership Attributes That Drive Digital SuccessMatthew Cain (G00382707)

https://www.gartner.com/document/3905893





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Digital Transformation in Insurance · 2019-09-06 · is proprietary to Gartner, Inc. and/or its affiliates and is for the sole internal use of the intended recipients. Because this