Driving progress in modernization projects requires a commitment to change management. 

Amazon transformed from selling books into the biggest online marketplace, Netflix shifted to streaming services from mailing DVDs, and GE has undergone many transitions over the years, with the latest including a shift from physical goods to software development and IoT-enabled technology.

In the insurance industry, there have also been industry-wide disruptions prompted by incremental transformations by individual companies. Progressive changed the model for personal auto insurers with its drive-in inspection locations, centralizing resources to disrupt the traditional solution. This model has been further disrupted by the widespread adoption of digital appraisals, which have been brought into the mainstream by companies like Snapsheet.

Progressive is also credited with being the first insurer to integrate modern telematics into its operations. Lemonade, structured as a certified B-corp, operates with a unique model and allocates excess profits to customer-selected charities annually through its Giveback program.  Embedded insurance once predominantly a travel insurance product, has transitioned into a mainstream offering, with Deloitte predicting a possible $50 billion shift in premiums to embedded sources by 2030.

However, these radical shifts were only possible with adaptations to culture, workflows, and leadership styles. Change management has acted as the driving force behind these transformative shifts, significantly reducing resistance and enhancing success in the industry's journey towards digital transformation, including advancements like claims management platforms.

“We’ve learned the most successful digital transformations start with a robust change management strategy,” explained Andy Cohen, President at Snapsheet. “Companies that invest in this step first see faster results with more engaged employees and higher morale. This also helps ensure the transformation aligns with strategic goals, integrating the new way of working into culture and processes right away.”

The Role of Leadership in Digital Transformations

It is no surprise that leaders drive change through their actions and words. When they introduce new processes but fail to actively participate or embrace them, they often struggle to inspire their teams to follow suit.

One effective way leaders can support change management to drive digital transformations is by setting strategic goals that align with the organization’s mission. Engaging stakeholders along the way will help leaders build support and ensure buy-in.

Setting strategic goals can include:

  • Engaging stakeholders
  • Aligning goals to mission and vision
  • Using FAST goal framework
  • Setting incremental goals and frequently checking progress
  • Encouraging innovative thinking

Next, leaders should clearly communicate these goals and objectives, including answering questions transparently. Sharing the purpose and benefits of the goals helps establish support and reduce resistance among stakeholders. The most successful leaders empower their teams to embrace transformations. Gartner found that 80% of companies lead change initiatives from the top down, which means leaders must support and drive transformations.

The Interplay of Change Management and Transformation

Change management is the catalyst behind digital transformations. It sets the stage and creates an environment where stakeholders can adapt quickly and successfully. 

Change management supports and accelerates transformations by:

  • Reducing resistance among stakeholders.
  • Resolving challenges faster through transparency and cross-level communication.
  • Gaining trust by empowering employees to participate in the change process.
  • Improving efficiency through better workflows and reduced barriers.
  •  Facilitating smooth transitions by aiding stakeholders in comprehending the enhanced quality of life following the transformation.

When employees are involved in change and understand what’s in it for them, they are more likely to support it. And when leaders promote transformations through open communication and positive action, employees can join them in driving progress toward goals.

Best Practices for Successful Transformations

A digital transformation is intended to improve the insurer in some key way, such as by lowering cycle time or reducing expenses. For example, researchers at McKinsey found insurers that automate parts of their claims experience can reduce claims costs by up to 30%! This highlights the criticality of a successful digital transformation.

A recent survey by McKinsey determined the five best practices that are the keys to success with digital transformations:

  1. Have the right business leaders in place
  2. Communicate often and openly through omnichannel methods
  3. Empower people to work differently
  4. Build capabilities and upskill for the future
  5. Update tools employees use most often
researchers at McKinsey found insurers that automate parts of their claims experience can reduce claims costs by up to 30%!

In addition to these best practices, try these ideas:

Comprehensive Change Management Plan

Insurers should create a comprehensive plan that includes a stakeholder analysis and plans to engage with stakeholders. This plan should outline the strategy behind the transformation.

Phased Implementation Plan

Larger transformations call for a phased implementation or roll-out. Consider how to introduce and structure key components of the transformation.

Change Culture

Develop an environment where employees feel comfortable taking risks and trying new things. Change cannot happen without some element of risk — and when it fails, employees need to be supported to try again.

Industry Growth Continues Thanks to Change Management Initiatives

As the risk and insurance industry continues to navigate modern insurance in a digital world, the role of change management in facilitating successful transformations is critical. Revolutionary shifts, like the proliferation of embedded insurance and the adoption of virtual appraisals, demonstrate the industry's adaptability. And the catalyst driving these shifts is a well-designed and executed change management strategy.

As Andy Cohen noted, the most effective digital transformations are supported by robust change management that ensures transitions align with strategic goals. Leaders continue to play a significant role in the success of transformation projects. Looking ahead, radical disruptions and incremental shifts driven by change management will drive the industry's future.

External Sources:

  1. https://www.lemonade.com/giveback
  2. https://www2.deloitte.com/us/en/insights/industry/financial-services/financial-services-industry-predictions/2023/embedded-insurance.html
  3. https://sloanreview.mit.edu/article/with-goals-fast-beats-smart/ 
  1. https://emt.gartnerweb.com/ngw/globalassets/en/human-resources/documents/trends/changing-change-management.pdf
  2. https://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20insights/time%20for%20insurance%20companies%20to%20face%20digital%20reality/digital-disruption-in-insurance.ashx
  3. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/unlocking-success-in-digital-transformations

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