The insurance industry is going through a great evolution due to digitization, and the COVID-19 pandemic has accelerated this process, separating so-called digital laggards from digital competitors.
That is according to Bill Pieroni, president & CEO of ACORD, who highlighted the importance of digitization in creating strategic and tactical differentiation for insurers and brokers.
In an interview with IBTV, Pieroni emphasized that digitization is not just IT spend but an alignment between strategic intent and the processes, organizational elements, and culture of the organization.
“When I first came to ACORD over five years ago, we did a study, an empirical study, to see – does digitization matter in the way that I’m describing,” he said. “And we found a direct and very strong correlation between those KPIs, specifically premium growth, free cash flow, and total shareholder returns, as measured by real share price depreciation, plus dividends adjusted for inflation.”
The study, which has since been conducted annually, also showed a dramatic acceleration of digital maturity between pre- and post-pandemic for those with a higher level of digital maturity and those without.
As such, Pieroni described the pandemic as a “time machine and a real inflection point,” noting how the organizations with the lowest level of digital maturity have had to face a “moment of truth” because of it.
When asked how firms should prioritize digitization, Pieroni recommended addressing technical debt first, focusing on servers, infrastructure, networks, and other implicit forms of debt that are often ignored.
“They’re kind of boring,” he said. “They’re plumbing, they’re infrastructure. If I use a house analogy, it’s electrical wires and plumbing versus tile and paint, right.
“This should be followed by the more explicit forms of technical debt, such as “the look and feel, the features and functionality of the software or your application portfolio or data.”
“That tends to be a bit more obvious,” Pieroni said. “That tends to have a lower amount of technical debt there.”
Watch the full interview to learn more about Bill Pieroni’s insights about digitization in the insurance industry.
