I recently became aware of a new show streaming on Peacock called The Gentle Art of Swedish Death Cleaning. Döstädning, or Swedish death cleaning, is a well-known concept in Swedish and Scandinavian culture, where you work on eliminating unnecessary items from your home so loved ones won’t be burdened with the task after you pass.
I couldn’t help but draw a connection to the legacy transformation efforts underway by many carriers in the insurance industry. I was intrigued as I researched the topic further, finding more and more parallels. In House Beautiful’s May article Everything You Need to Know About Swedish Death Cleaning, the author identified six tips to free yourself from clutter.
Each of these tips goes beyond household cleaning advice. They each provide good recommendations for those embarking on a transformation program focused on decluttering the complex ecosystems in use by insurance companies. Here are my revised versions of those six tips for insurance IT leaders:
Many carriers have a high level of technical debt built up over time as they added core systems to their environments along with the integration solutions required to bridge the core systems to one another. Older technology makes it difficult to provide a digital experience for agents and policyholders. For many carriers, their legacy underpinnings preclude them from fully exploiting the benefits afforded by newer technologies, such as cloud computing, artificial intelligence, predictive analytics.
Insurers are coming to understand that a strategy that requires every policy and block of business to be moved to a new platform often results in the addition of one more core system rather than a reduction. The focus should be on simplifying the ecosystem by removing systems from their environment. This can only be accomplished by rationalizing the disposition of every policy block to ensure it fits with the current strategy and desired business model.
Discard With Intention, not Guilt
A block analysis is key to determining which business is appropriate to include in the transformation. Block analysis provides the opportunity to understand the blocks in depth and provides insights into the challenges and constraints each block segment contains. These insights allow carriers to break up the blocks and recompose them in a way that augments the number of feasible transformation options.
Carriers can focus on optimizing their business operations as well as on optimizing the underlying technology ecosystem they have in place to support each block. For example, carriers can evaluate whether it makes sense to have an ITO or BPO vendor perform the optimization, whether optimization should occur before or after the transition, or even if it makes sense to optimize at all, perhaps selling off the block.
Carriers are starting to look at the configurable capabilities available in modern policy admin suites and are focused on forgoing expensive customizations that are not providing added value and only serve to preserve long-standing processes and practices. In many instances, senior executive governance boards are being established to oversee all recommendations for customization and requiring rigorous cost benefit analyses to justify their need.
Be Considerate of Others
As part of the effort, focus on the customer is still required, whether the customer is the agent or the policyholder. Since some strategies can result in a bifurcation of the service experience for these customers, it is important to ensure that service levels for in-house and outsourced business are appropriate for their respective client bases. As companies decide the appropriate disposition of policies across systems and service providers, it is important to consider such factors as orphaned policies, households with multiple contracts, and the distribution across agents’ books of business.
Take Care of Yourself
Finally, as the Great Resignation advances further, companies are becoming aware of the risks associated with the loss of institutional knowledge related to the systems, products, and processes in their operations. To mitigate these risks, insurers are looking to document home-grown workarounds and unimplemented, future-dated product features. They are also implementing apprenticeships and training programs to ensure the knowledge required to support the business during the transformation is available in house.
It is important to recognize that change and letting go of the past is extremely hard. Many organizations struggle with this, and it often provides the greatest risk to a success transformation program. However, like döstädning, it is a worthwhile endeavor that, if treated with care and dignity, will have a lasting impact.
For more information on how block analysis can help carriers declutter their complex infrastructure, refer to the following Executive Brief: Block Analysis and Life Systems Transformation.