Chief InsurTech Officer, the CIO 2.0

George Kesselman, President, InsurTech Asia Association

George Kesselman, President, InsurTech Asia Association

The past three years have seen a fundamental shift in the insurance technology space. IT has quietly transformed from the vital back-end support function into a driver seat when it comes to building the future growth of insurance business. Digital has quickly blurred the boundaries between the IT, distribution and other core insurance functions. Enter the age of InsurTech!

The opening shot of InsurTech race was fired on 11 November 2017 by Zhong An, Chinese digital-first insurer and the most successful global InsurTech so far. The peak digital insurance sales volume was 240,00 per second on Alibaba’s Tmall website, with a total being a staggering 860 million insurance policies sold online in a day.

CIO has a critical role to play in shaping the long-term future of insurance and there needs to be a significant mindset change for that to happen effectively. Legacy mindsets cultivated through the last 30 years of IT band-aid approach and resulting focus on near constant firefighting are constraining CIO’s real potential to move their function into a value-generating tech unit.

240,000 Transactions per second CIO

The insurance company needs a CIO who has a deep understanding of technology and how to properly drive solution for business problems. Someone who is not bound by the traditional thinking and the old legacy constraints of existing IT systems. This is where the Chief Digital Officer, Chief Innovation Officer and Chief Information Officer roles are all converging together to make this a growth-enabling Chief InsurTech Officer (CIO 2.0) role for an insurance company.

Unfortunately, we still see examples abound from around the industry where insurance CIOs erroneously see themselves as guardians of the old legacy systems and all the baggage that comes with it.

Re-igniting ownership of the intellectual property will be the key aspect of the long term survival of an insurance company

“Our systems won’t be able to support that unless you invest in core system XYZ upgrade which will take five years and $50 million investment”—quickly leads to the us-against-them environment. Business ends up feeling handcuffed by IT to do anything different when it comes to insurance propositions. This, in turn, leads to an erosion of long-term competitiveness, as new digital-first players are testing the insurance industry’s agility.

What is CIO to do?

CIO needs to lead the critical transition to the IT of the future, starting with the fundamental forward re-orientation and a cultural restart:

1) Not all problems can be resolved by throwing more money at them. A culture of problem solving and curiosity needs to be revived and cultivated within insurance tech teams;

2) Creation of a dedicated “special ops” teams driving digital transformation and building the future technology intellectual property (IP) underpinning future digital insurance;

3) Fix persistent misalignment between business units by increasing proximity between tech and business units, to focus joint efforts on the most impactful problems; Team KPIs need to be realigned to reward experimentation and joint problem solving. Teams need to be allowed to fail;

4) External and open orientation is critical, with close collaboration and cross-learning with tech startup and tech solution provider. The CIO 2.0 has gained a deep understanding of how different teams work together and how to drive tech-enabled synergies between those units with in order to deliver strong strategic outcomes. The understanding of the existing system constraints becomes an invaluable asset rather than a liability.

The over-reliance on expensive consultants and outsourcing firms needs to reduce or stop, and the technology core skill set will need to be brought in-house and cultivated within the technology team. It will undoubtedly take time and significant effort but working with innovative technology startups and businesses will help to accelerate that journey. Re-igniting ownership of the intellectual property will be the key aspect of the long term survival of an insurance company.

Insurance is quickly pivoting towards a new type of digitally-enabled models. Next 10 years will see a complete transformation of insurance industry. Each CIO will have a choice of whether to focus on becoming a core part of the digital business or to stay in the comfort zone and become ring fenced together with the legacy business.

The future of insurance is digital; resistance is futile!