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Change is Good: Overcoming Resistance to IT Adjustments

Craig Robinson | May 12, 2014

Progress is impossible without change.”

George Bernard Shaw

Industries like retail and banking have been leveraging “disruptive” technologies for many years to make customers happier, operations more efficient, and bottom lines larger.  Insurance companies know the advantages of innovative core component IT systems—increased productivity/profitability, improved accuracy, better customer experiences—but they are slow to implement.  In fact, only about five percent of the 2,500 American P&C insurance companies have invested in these advanced systems, with perhaps another 10 to 15 percent using in-house solutions with some calculation capability.

Why?  The short answer in most cases is that existing “legacy” IT systems and manual procedures work just fine.  Even global insurance companies with several incompatible systems often prefer to limp along with cumbersome data-conversion processes rather than switch to a single system with the flexibility to accommodate different languages, currencies, and locales.  By comparison, the banking industry started switching to single global IT systems in the 1970s.

What’s holding things up in the insurance industry?  The answer boils down to the objections of a few key executives or groups.  Here’s how we answer some of these protests.

Progressive CIOs: “Nobody else believes IT change is worthwhile.”

Translation: The C-suite isn’t on board.  Solution: Speak their language.  Don’t confuse them with IT jargon and tell them a good core system can improve productivity and profitability.  The C-suite thinks in terms of the bottom line, so show them.  Calculate the cost savings, productivity and profitability increases your company can expect.  Arm yourself with case histories of how other insurance firms have benefitted from upgrading.  Any vendor will be happy to help with this.

For example, show them how much your company spends on hardware and application maintenance.  Would they like to eliminate that cost?  Then tell them about the insurance company that achieved this by implementing a core component system, enabling the removal of several legacy policy administration systems.  It also reduced labor-intensive administrative re-keying and cross-application reconciliation—how much time would your company save?  And customer response times improved so much that renewal attrition rates decreased dramatically.  No doubt your company has calculated the higher cost of replacing lost business versus renewing, so show them projected savings on that, too.

The bottom line: The tangible business savings will justify the investment several-fold and help your company achieve its financial goals.  Is a “big bang” approach too much? Suggest a smaller first step, like implementing the new system for claims to see how it goes.  This approach will not only help sell the idea of an IT upgrade, it will also help CIOs position themselves as part of the business strategy team.

Typical CFOs: “It’s too expensive.”

Translation: CFOs see IT as an expense, not an investment.  Solution: See above on tangible benefits.  Then put a cherry on top by explaining how a good core component system can recover literally millions of dollars by identifying previously undiscovered reinsurance collectibles.

Explain how shortly after implementing a new core component system, a commercial insurer identified a $1.9 million aggregated claim previously unidentified by manual methods.  Tell him that a workers’ comp insurer with a new core component system used the automated identification of losses subject to reinsurance application to find $4 million in previously unidentified recoverables.  Then explain how the core system will prevent overlooked reinsurance collectibles moving forward.  Altogether, this should be an eye-opener, and a game-changer.

Most CEOs: “It’s too risky and disruptive.”

Translation: Prove it.  Solution: As the first two approaches above indicate, the value of sophisticated core component systems is proven.  But CEOs will want to know how a new IT system will improve your company’s performance, and how much disruption is involved in the transition.

Be honest.  All change involves some discomfort.  Transitions to core component systems aren’t easy, but they aren’t nightmares, either, with proper planning and phased implementation.  The transition to PCs and notebooks wasn’t easy 25-30 years ago, but imagine life without them today.  And how long did it take to get comfortable with your smart phone or tablet?

As Henry Kaiser (of Kaiser Aluminum) said, “If you sit on the lid of progress, eventually you’ll be blown to pieces.”  Look what happened to Kodak and Blockbuster and dozens of other companies that resisted change.  How many insurance competitors are stealing a march on your company with sophisticated systems that help enable the mobile apps, intuitive web pages, and other innovations that make millions of Gen Xers and Millennials happy?

Company Users: “Change will negatively affect me!”

Translation: Great, another change without my input.  Solution: Take the time to get buy-in from leaders in key groups, such as underwriting, claims, and sales.  Take a positive approach.

For example, reinsurance underwriters spend a lot of time examining multiple databases and spreadsheets during renewals to determine appropriate changes to terms and conditions (T&C).  Even then, changes are based on experience and intuition as much as data and it takes a year to see results.  So ask them how they’d like it if they could simply plug in T&C changes, enter the premium, and click to get a reliable calculation of probable results in minutes.  No more guesswork or bad risks. Once the leaders are excited about the new capabilities, they’ll spread the word … and suffer the “changes” with a smile.

Change is Good, and Necessary

Most people don’t like the discomfort of change, but they usually love the positive outcomes.  Insurance companies that delay IT upgrades are missing the big picture, despite evidence all around them.  Geico is running ads featuring mobile apps for getting quotes, changing policy features and storing insurance cards.  Amica is working wonders with customer satisfaction by leveraging technology to make dealing with them easy and painless.  This sort of innovation isn’t possible without a good core component system to anchor your technology.

What are you waiting for?

(Craig Robinson is head of business development, North America, at Xuber. He has a proven track record selling technology solutions in the insurance/reinsurance arena with roles at StoneRiver, Sherwood International/SunGard and ReCapital, General and National Reinsurance companies. With over 30 years’ experience in the reinsurance software market, Robinson has been instrumental in helping companies extend their market penetration and drive revenue. He joined Xuber in August 2013.)

 

 

 


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