Digitalization in Insurance: Myths and Counter-Myths


FinTech, InsTech, Regtech, Big data, Robotization, Digitalisation, disruptive technology. All these Buzz words are heard everywhere in the financial industry nowadays. For the insurance industry, digitalisation in particular is « le  mot à la mode » globally, being one of the main topics of insurance conference agendas around the world, from Paris to New-York through to Luxembourg.

What does digitalisation really refer to from the insurance industry’s perspective? Well, there are certainly different ways to define digitalisation, but one could summarise digitalisation as the top technological driven innovation in insurance.

Even Though the digital transformation of the financial industry as a whole has been moving at a very fast pace , in the insurance industry, many companies have not yet made the leap.

Some of the reasons that are often heard of constraining insurance companies to get into the digitalisation of their processes are paradoxically the same reasons that should prompt them to take the plunge.

Among all the various reasons, the following seem to appear repeatedly:

  • Digitalisation is too expensive
  • Our company is not technically ready
  • Our organisation hasn’t got a strategy for digital transformation or digitalisation is not a priority for the board
  • Our company is not big enough for digital transformation
  • We have a traditional costumer target audience that might not be “digitally advanced”

Although all these reasons could somehow be legitimate as obstacles to the change, yet they could equally be seen as arguments to adopt digital transformation.

Let us review these arguments one by one and see how they can be interpreted as counter-arguments.

Myth N° 1-      Digital transformation is too expensive:

This is one of the major myths in the industry. Not only can digital transformation be acquired at a reasonable price, digitalisation of processes is aimed to be a cost saver in the medium run.

Digital transformation of business processes can generate significant gain in the form of reduced costs. One area where gain can be significant is for example the cost allocated for claims management. An introduction of a digital application for an insurer can reduce significantly the calls related to declaring claims and similarly reduce the related paperwork. This could also allow a better and quicker handling of claims, hence time saving.

  Myth N° 2-      We are not technically ready for digital transformation:

A general perception is that a large number of insurers find the change of IT infrastructures and processes to be an overwhelming challenge. Though it is undeniable that the stumbling stone from an IT perspective is often due to the limits of inhouse legacy systems, supporting processes and technology, different  options are nevertheless available to insurers to transform a number of discrete processes without making changes to their underlying technology structure.

It is also possible for insurers to keep their existing traditional IT infrastructure, and outsource their digital transformation to other more specialised technology companies. Today non- insurance independent players such as tech savvy companies, startups and specialised consulting firms offer help in digital transformation by proposing smart solutions for customers and insurance providers.

There are new innovative start-ups that help insurers understand customer's digital lifestyle footprint to provide better products and services.

These players  base their approach on  customer lifestyle scoring engines to optimise sales channels and achieve new market target and customer base.

Myth N 3-      Our organisation hasn’t got a  strategy for digital transformation or digitalisation is not a priority for the board:

Often Digitalisation is not prioritised in the board’s agenda because of a lack of strategy, and lack of the right talent to execute the transformation and deliver value.

The lack of strategy is a thorn in the foot when it comes to digital transformation, however this is not insurmountable.

Developing a framework for digital strategy can begin by asking trivial questions such as:

  • What are the current needs of customers?
  • What type of added value could the digital transformation bring to the customer’s experience and to the company?
  • How would this impact the current distribution channel and intermediaries?
  • What competitors do?
  • Do we have the right talent and the adequate infrastructure to cope with the transformation?
  • Shall we build the capabilities in house , or shall we seek for external providers?
  • How cost effective could the strategy be?
  • How will we comply with regulations and anticipate regulation changes.

This is not an exhaustive list of course, but a good start to drawing a blueprint strategy.

Finding the right talents to accompany and support the transformation can be challenging as talents with the right skills are often from outside the industry. Insurers need to compete with leading technology companies to acquire the right talents. Alternatively they can acquire assistance from consultancy firms that have adequate talent and a solid experience in digital transformation.

It is important to note that in a fast evolving industry context like ours, any strategy needs to be flexible, quickly adjustable and totally integrated into the overall business strategy.

Myth N°4-      Our company is not big enough for digital transformation:

For digital transformation, size doesn’t matter when your plan and strategy are clear. Companies of all sizes can easily transform their legacy system, technology and business model.

On the contrary of what one could think, it is a clear opportunity for small or midsize players to leverage on digital transformation to operate dramatic changes and grow their business rapidly.

Small and medium sized insurance companies can seize the opportunity of digitalisation to enhance and personalise their products and services for their mid-market share and make an excellent costumer experience possible.

Myth N°5-  We have a traditional costumer targets that might not be “digitally advanced”.

More and more customers make smart decisions about the products and services that they purchase. It is a big mistake to believe that any traditional target market does not evolve with time, and is afraid of any changes, or any technological evolution. Many customers (including traditional ones) are more willing to try new brands than in the past, therefore it’s  vital that insurers evolve fast in order to remain competitive.


Today, major players in the financial industry are investing hundreds of millions of euros to operate their digital transformation globally. Non-insurance players, such as tech start-ups, are embracing the same path considering the abundant opportunities resulting from the disruptive change in technology driven innovations in insurance. All these players are fully aware of the importance of customer engagement and retention  in the current environment.   Consumers now expect to buy what they want, whenever and wherever at the best price.

The traditional insurance world needs to see what is happening and catch the train of the transformation before it is too late . Charlie Munger, Warren Buffett's right-hand man, said once < Never be the first or the last to get into a new change >.

About the Author


Christian Mass-Malo joined Initio in October 2017 after living and working in Dublin, Ireland for the past 10 years. Christian is initially an actuary with past experiences in the financial sector within Insurance and Bank-Insurance Groups, essentially in Actuarial and IT departments.

His main areas of expertise are Solvency II deliverable, Reserving/Valuation reporting, Valuation modelling, Capital modelling and risk management, ORSA, MCEV, SII, risk management and PROPHET Modelling.