Cultural and agile transformation in life insurance as a response to digitalization and changing customer behaviour
The life insurance industry is facing a variety of challenges. Intuitively, many think of the capital market challenges or internal transformation projects. The significant increase in volatility on the capital market, not least in 2022 with rapidly rising interest rates, or the regulatory challenges associated with the management of Solvency II and the current EIOPA review, undoubtedly place increased demands on the management of life insurance companies. This situation is further complicated by internal IT projects, especially the replacement or change of aging policy management systems, as well as by strong cost pressure.
However, the greater challenges lie in the comprehensive future development of the business model. After all, life insurance is unfortunately characterized by a certain complexity and lack of transparency. Simplicity and intuitive use are the supreme discipline in design at Apple. In actuarial life insurance, however, these have not always been the guiding principles of action in the past. The decisive factor here is to set the right impulses for a fundamental further development of the business model and not to fall back on the proven logics of the past. Peter Drucker put it this way: „The greatest danger in times of turbulence is not the turbulence – it is to act with yesterday´s logic“.
Anchoring of change: why, what und how
In order to anchor the change in the company comprehensively in terms of content and emotion ("in the hearts of the people"), the framework developed by Sinek is a good reference. The following figure represents the simple and yet useful logic:
At the beginning of a transformation process, it is crucial that companies intensively reflect on their own "Why", the reason for their existence ("Why do we exist"?). The "why" represents the north star for the company's own transformation process and provides the entire company with a clear orientation. Sinek then points out the necessity of breaking down this purpose in the form of a clear strategy program (the "What"). The "What" thus represents the action program in terms of content, which leads into an implementation plan and is tracked with classic KPIs in the sense of the OKR approach (focus on outcome and key results) with regard to implementation.
In addition to the "why" and "what," it is equally crucial to ask how a company's vision and strategy are embedded in its corporate and leadership culture. In a study conducted by Heidrick & Struggles, 82% of the 500 CEOs surveyed confirmed that corporate culture is a core priority. Companies should therefore intensively address the question of what implications arise from the vision and strategy for leadership and corporate culture and how this becomes visible in everyday life.
This foundation should be strong enough to take the entire company through the uncertain phase of structural and process adjustments associated with the introduction of agile scaling formats. In contrast, companies that start very early in the transformation with the "processes and structures" levers face many forces of inertia in the company - which is normal, because we humans protect ourselves from losing relationships, bonds and seek the protection of the group. In the end, we should be aware that companies are social systems, where in stable times many human dramas, emotions and fears are reproduced day after day. In times of transformation, these emotions and fears are amplified and block - often unconsciously - our individual and collective actions. This is where transformation becomes most effective and - done correctly - can achieve a lot.