In a recent meeting of top business and digital insurance leaders, the focus was on an important question: While insurance companies understand why and what they need to do for digital transformation, the real challenge is figuring out how to get it done.
Insurance executives recognize the need to integrate digital and analytics into their operations. They know the reasons behind this shift, and most have a clear idea of what needs to be done. But the real difficulty lies in the execution. Should they start by transforming everything from the top down? Should they start with smaller digital initiatives that gradually scale over time? Should they adopt a new business model? Or should they focus on improving the customer journey first? The answer isn’t straightforward, and that’s why many insurance companies feel stuck in the process.
Last week, over 35 senior leaders from 20 major life and property casualty (P&C) insurance companies gathered for the annual McKinsey North America Insurance Digital Leaders Forum (IDLF). The conversations throughout the event centered around the challenge of implementing digital and analytics strategies effectively.
Here are four key insights that emerged from the discussions:
1. Maximize Every Dollar Invested in Digital and Analytics
Digital and analytics investments are only valuable if executed correctly. For every dollar spent on digital tools, an equal or greater amount must be invested in critical areas like talent acquisition, adjusting the operating model, and managing change effectively. To make this work, insurers need to carefully consider the type of team required, the best sequence of efforts, and when to involve front-line employees in decision-making. Insurers must focus on business problems and tailor their digital strategies to solve these challenges. By prioritizing change management, insurers can avoid unnecessary delays and costly mistakes.
2. Prepare for the Future of Work
Traditional skills and ways of working are no longer enough for insurers on their digital journey. Many insurers admit they lack a full understanding of the skills and roles needed in the future workforce. However, few are taking action to address this gap. Preparing for the future of work requires changes in incentives, performance management, and career development programs. Building interdisciplinary teams is essential, as different skills and approaches are needed for successful digital transformations. It’s important to start thinking about talent needs now to ensure success down the road.
3. Tackle Digital Transformation in Phases
Digital transformation can feel like an overwhelming task—like trying to eat an elephant all at once. Insurers should avoid treating it as a single large project and instead break it down into manageable steps. This doesn’t mean taking a random approach to digital transformation. Instead, insurers should create strategies for digital, data, and analytics that align with business priorities and drive value.
“This strategy ensures resources are invested only in initiatives that deliver meaningful impact.”
Looking at successful examples from other companies can provide valuable guidance on how to approach digital transformation and maximize ROI.
4. Secure Top-Level Support for Transformation
Insurance companies have a significant advantage in their data, industry knowledge, and operational experience. However, many digital transformation efforts fall short due to a lack of capital, talent, or leadership support. Strong, active sponsorship from the top levels of the organization is crucial for success. Leaders must ensure that digital transformation initiatives receive the resources they need and overcome any bureaucratic hurdles. Insurers should focus on understanding the opportunities digital transformation presents and learn from the experiences of other companies.
Conclusion Insurance companies have high aspirations for digital transformation, but the path forward isn’t always clear. It’s not just about spending money—it’s about understanding the opportunities and approaching the process strategically. By focusing on business needs, preparing for the future of work, taking a phased approach, and securing strong leadership support, insurers can successfully navigate their digital transformation journey.
We look forward to continuing the conversation with our peers in the industry.