According to a recent McKinsey & Company report, “The Making of a Digital Insurer,” one in six insurers are integrating a digital strategy into their overall business strategy.
And to stay competitive, independent agencies must follow suit, transforming key areas and seeking digital distinction. “I think the world is becoming digital—it’s no longer an initiative, it’s becoming just the way you operate,” says Tanguy Catlin, principal at McKinsey.
How should your agency respond?
Identify Your Culture
“Customers nowadays have expectations that are derived from their experiences outside of insurance—their interactions with Amazon, Facebook, Apple and Google,” Catlin says. “How do we want customers to interact with the independent agent? What do we want the journey to feel like? What are the emotions, the social experiences that we want them to experience?”
Optimization for the customer is key, so does your staff have an appreciation for digitally optimizing their customer’s experience? Catlin recommends designing recruitment strategies around this mindset, rather than focusing on talent with insurance expertise. “We find that augmenting your skillset with that type of digital talent is extremely important,” Catlin says.
But that type of top digital talent is in high demand—and they’ll want to go where there are opportunities. That means shifting organizational culture is key. “The value proposition of an independent agent is quite well aligned with many aspects of what customers value in the digital era,” Catlin says.
To cultivate a truly successful digital culture, keep these attributes in mind:
- External organization. Partner with other service providers to complement your value proposition instead of just providing coverage.
- Risk-taking culture. “If you don’t try anything in that market, you’ll become irrelevant,” Catlin says. “When you try things, you don’t fail—you learn.”
- Velocity agility. “Independent agents need a culture where they can get to actions quickly and are much more closely aligned with the digital needs of consumers and how to compete today,” Catlin says. “You cannot take ages from deciding to do something to doing something. The market is moving fast.”
- Effective cross-functionality. Digitally centric organizations that tend to perform better “have found ways to work with small teams thathave been empowered to make decisions relatively quickly and work efficiently across functions,” Catlin says.
Most important? Determine what kind of budget you want to put behind digital initiatives and resources—and clearly clarify what you’re trying to accomplish through digital.
“One way to generate that clarity is having very clear key performance indicators (KPIs) that the agency wants to pursue for digital,” Catlin says. “We find astonishingly that people are telling us that digital is a priority are able to give us the KPIs that they are trying to push through digital.”
‘The Management Agenda’
From human resources to claims to distribution, “digital impacts every aspect of your enterprise,” Catlin says. “We wanted to simplify the way an executive can think about digital.”
Start asking questions and assess your agency’s digital maturity. Do you have the appetite and time to do things differently? “If you’re not willing to try things, don’t even start,” Catlin says. “Be honest with yourself about how ready you are to go through the journey.”
That requires determining whether your agency has an advanced technological infrastructure in place or a digital culture full of empowered employees who embrace cross-functional collaboration, so you know where to focus your efforts.
After that, “look at your customers' needs and the activities that you are pursuing and try to identify ways digital can have impact,” Catlin says. Be part of the 10% of insurers in McKinsey research that aligned their digital strategy to maximize effectiveness across the full decision journey.
McKinsey advises assessing both business value and readiness for impact. “I think the third step is defined not by the magnitude of what you are trying to accomplish, but by how you accomplish it,” Catlin says. Find the right talent, form the best teams and enable them to pursue digital opportunities. After running pilots to learn what works and what doesn’t, celebrate successes—“that’s what drives your ability to scale it into bigger and bigger initiatives and change faster,” Catlin says.
There is no one-size-fits-all implementation approach—each agency may have existing digital assets that another may not. But “I don’t think people can afford not doing it today,” Catlin says. “It’s much more important to start and learn than to seek perfection at this stage. It is a skill set, and those who are willing to practice the most will perform best.”
Morgan Smith is IA assistant editor.