Insurance companies are navigating a period of extreme uncertainty that requires them to negotiate an unprecedented set of challenges at the same time. As well as sparking much higher inflation, multiple price shocks, are increasing the odds of recession across the major developed economies. This is especially challenging for insurance companies because it follows a long period of relative economic stability. No one who entered the industry within the past 15 years has experienced an inflationary environment like the one that exists today. The sector’s lack of institutional knowledge across the ranks of middle management is therefore acute.
Insurers therefore face a reckoning. It’s time for a different approach to the levers that insurers typically pull to drive transformation – capital, costs, growth and distribution, ESG, technology, and people. In this report, we set out the benefits of each lever, as well as the difficulties companies have in achieving them. We also identify the lessons we have learned from working with clients as to how the most successfully managed transformation programs organize, deliver, and manage the change. Armed with this insight, insurers can start to deliver transformation at the scale needed in a time of such deep uncertainty.
Transforming transformations: what needs to change?
To execute transformation successfully in an environment with so many variables, insurers would be well advised not to rely any longer on approaches that have required heavy investment, but produced such indifferent results. Instead, they should fundamentally rethink the way they approach transformation. It is more important than ever that transformation programs deliver the promised benefits. To ensure that happens, they need to look again at how they manage these programs and learn from organizations that have achieved success.
We have worked with several insurers in supporting their most complex transformation programs. The drivers for change may be varied, but in our experience, successful transformation programs share common features that companies can use as a framework to help them organize, deliver, and manage change:
- 1How to organize: They structure project teams to focus on outcomes, adopt effective governance models, and embed technology fully in the process
- 2How to deliver: They build in accountability and devolve decision-making, and take a pragmatic approach to delivery models by deciding when to deploy capabilities such as agile
- 3How to transform: They aim to build lasting transformation capabilities across the organization, factor in the additional complexity created by hybrid work models, and rethink how information is relayed to decision-makers
Insurance companies should assess the maturity of their organization against these attributes to identify which areas need to be addressed first. The transformation work can then begin, typically happening in four phases:
1. First, align as a team…
The first step is to unite around a single vision that encompasses business strategy, the company’s operating model, its technology, and people. Then assess readiness across the three key areas – organize, deliver, transform – and identify gaps to be tackled first, as well as informal program leaders.
2. Then, design and plan…
The aim should be to take stock of existing initiatives, integrate coherently with them, and rapidly design what the company needs to build, with stages defined in terms of outcomes for the organization. This is also the point at which to set up the project governance and leadership, and to start identifying quick wins.
3. Do not neglect to set up the change…
At this stage the company must plan how it intends to take colleagues, customers, and stakeholder through the change process. The phasing of the project must be agreed at cohort level, informal change leaders must be identified and prepared, and a supportsquad system should be put in place for complex changes. Delivery of quick wins should begin.
4. Deliver effectively...
Execute the project plan following the pre-defined steps agreed in the design and plan stage. The aim should be to deliver the enhanced capabilities the organization is targeting and transition them to BAU, but also to build in leadership and change capability with teams as a lasting skillset.
This approach offers a way out of the unproductive and debilitating cycle of constant change that many insurance companies find themselves in. Importantly, by using our blueprint for transforming transformations, organizations will be able to achieve tangible progress fast, identifying quick wins that will combat the danger of “transformation fatigue.”
