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Digital Transformation: Prerequisites for Success in the Insurance Industry
Nicole Kellenberger, Global Eadmin Lead, Swiss RE and Sven Scandella, Head of ITP&C Business Management, Swiss RE and Bill Pieroni, President & CEO of Acord, Nelson Tham, Asia Eadmin Lead, Swiss RE


Nicole Kellenberger, Global Eadmin Lead, Swiss RE and Sven Scandella, Head of ITP&C Business Management, Swiss RE
The insurance industry is made up of thousands of independent and interdependent companies interacting with customers, vendors and reinsurers scattered throughout the globe. From paper forms and actuarial tables to mobile apps and the Internet of Things, it has always been driven primarily by the collection and exchange of information. With each new advance, the use of universal standards and applied technology has helped to make the exchange of data more efficient and, ultimately, more effective.
Many insurers and reinsurers working with ACORD, like Swiss Re, recognize that a key priority is the development of Next-Generation Digital Standards . These standards will streamline and facilitate data exchange through new and emerging technologies. Optimizing the impact of these technologies will require applying them to new strategies, processes, and organizational capabilities. Research indicates that companies incorporating digital capabilities at the most fundamental level of their businesses show superior performance across key financial metrics.
The Digitization Imperative
It has become apparent the insurance industry is at a critical and uncertain inflection point. The global macroeconomic climate, hyper-maturity of key segments, and increasingly sophisticated consumer demands have combined to impose significant resource constraints on most insurers. In this environment, the potential impact of thoughtfully leveraged technology is unprecedented.
High-performing insurers have been acting on critical strategic imperatives to deal with the pressures currently facing the industry.
• Consumerization – Insurance purchasers’ expectations are not shaped by the insurance industry alone, but by their experiences with online and app-based shopping across all industries. It is critical to recognize and adapt to this fundamental change in insurer-customer interactions.
• Ecosystem integration – Efficient internal information exchange is no longer enough to create competitive advantage. Successful insurers are able to integrate effectively with partners, vendors, and other third parties across the greater insurance ecosystem.
• Data and analytics – Mining, aggregating, and even analyzing data are largely solved problems for the insurance industry. The challenge now lies in developing the tools and techniques to leverage that data effectively at the moment of value.
Implementing digitization is the thread that ties these strategic imperatives together, allowing an entire industry to address them effectively. ACORD analysis has shown that while technology spending alone does not necessarily lead to high performance, proper alignment of strategic intent and capabilities with digital maturity unambiguously does. In fact, digitally mature insurers have achieved 2-4 times the total shareholder return, premium growth, and earnings growth of their less digitized competitors.

Enterprise digitization across the entire value chain provides the flexibility and adaptability necessary to address emerging challenges and opportunities at the moment of value—for instance, when a customer is trying to bind coverage or to file a claim. Incorporating digitization as a fundamental component of operations is key to building an effective and successful strategic operating model.
Swiss Re and The Digital Standards
Swiss Re started this journey 20 years ago with a publication on Electronic Data Interchange (EDI). It was in response to the increasing pressure of outsourcing Claims and Accounting, and the conclusion that using technology was the most sustainable way to become more efficient. The initial attempts were focused on Electronic Message Management. It was realized that only by sending and receiving structured information about premium and claims in a digitized form was this going to be effective.
Over time, the capabilities that allow the processing of the input will be translated into an organized structure covering all aspects required to handle a (Re-)Insurance contract: Technical Accounting, Financial Accounting and Claims Movement.
To that end, Swiss Re joined several key industry members in 2007 to found the Ruschlikon Group, with its aim to streamline operational processes within the (Re-)Insurance industry by establishing digital standards and best practices in a strong partnership with ACORD.
Since then, the standards and system capabilities enabled by Ruschlikon and ACORD have helped Swiss Re to reach a higher level of digital maturity – e.g., a majority of its Claims, Technical Accounting and Financial Accounting transactions are now automatically validated and processed. More than 50% of the Claims and Technical Accounting submissions Swiss Re receives are handled in a digital ACORD-based format. This enables Swiss Re to automatically capture, validate and process these submissions with limited manual intervention, realizing efficiencies of up to 70%.
The Asian Journey
In 2019, the Ruschlikon Group began its Asian journey with its first event organised in Singapore. More than 50 Reinsurers, Insurers, Brokers and Regulators attended. During the event, one topic emerged as a common challenge facing many international companies: how can the Asian entities take initiatives and convince their headquarters to embark on the digital transformation journey?
"Market share" could be the answer to this question. According to the Swiss Re Institute's analysis, insurers with foreign stakes account for just a fifth of market share (life and non-life) across Asia. Domestic insurers are more dominant in some markets, likely due to their longstanding presence and deep relationships with clients. To win over consumers and capture a higher share of business, foreign-owned insurers could consider allocating more budgets for digital transformation and innovation.
Conclusion
Both Swiss Re and ACORD foresee large potential in increasing the level of digitization and automation in the end-to-end business process. The aspiration for the next few years will be increasing the level of digitization and automation along the insurance value chain and to onboard the Placement and Underwriting processes. The next generation of technology (Machine Learning, AI) will allow all of us to drive digitization and automation more independently forward, as the current model requires a commitment and readiness from both trading partners.
Moving forward, digitization of the value chain will be a baseline requirement for success in the insurance industry. Firms that embrace digitization, incorporating it across the enterprise with a thoughtfulness of purpose, have positioned themselves for success in the current and future insurance environment.
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