It’s almost cliché to say we’re living in times of fast-paced change. Insurance isn't immune to the pace of change. Across northern hemisphere societies, where the insurance sector has matured a great deal more, demographics — owing especially to increased life expectancy — has changed a lot over the past few decades. Natural disasters do not cease to bewilder us. Geopolitical change redraws the balance we’ve grown used to for decades and our lifestyles are deeply impacted, altering consumer behaviour.

Given this backdrop of profound change, emergent risk and new concerns surface across contemporary societies. Insurance finds itself at the forefront of this existential struggle, trying to shore up preventative schemes (covering persons and property) and raising awareness on the need to increase protection given the current list of insurance protection gaps. The Portuguese economy faces meaningful protection gaps, all of which take a heavy toll on the insurance sector (climate risk and natural disasters, cyber risk, demographics risk — health coverage and pensions, pandemic risk, data gap risk, just to name a few of the most impactful).

For insurance to retain efficacy in the new normal, insurers have begun to adjust their stance and attitudes as well as action and operation procedures. Innovation and digital transformation have become not only relevant but instrumental. Innovation means creativity — creating or renewing something useful that adds value — plus execution: turning an idea into a successful business. Digital transformation means using technology to accelerate and increase the reliability of transformative processes across organizations — namely insurers, in this case. Joining innovation and associated techniques, especially design thinking methodologies, with digital transformation will in the near future prove the true factors in value creation throughout the insurance sector.

Digital transformation is clearly inevitable and, as we use technologies such as AI and generative AI, data can now be processed with the fast pace and reliability necessary to correct decision-making (using big data).

In this context, the need arose to develop a program around these themes which would bring sector stakeholders into the academic world. The Lisbon Business & Economics School at the Portuguese Catholic University incorporated this initiative into its Executive Training framework and, in November 2024, launched a program titled “Innovation and Transformation in Insurance,” which was my privilege to oversee. This was a 56-hour program supported by key sector stakeholders (the Portuguese Insurance and Pension Funds Oversight Authority, ASF, the Portuguese Insurers’ Association, APS, the National Insurance Agents and Brokers Association, APROSE, and, as Digital Transformation and Innovation Partner, NTT DATA). As instructors, the program welcomes teachers from Lisbon Catholic University, executives from the insurance sector, and tech specialists with strong ties to insurance, two of them from abroad.

Structurally, the program featured four sections:

1. Conceptual approach to new risk management, innovation, and digital transformation in insurance (11.5h);
2. New trends and digital transformation technologies in insurance (19h);
3. Digital transformation across the value chain in insurance (16h);
4. Innovation propositions in insurance — applying design thinking methodologies, design sprints, and conclusion (9.5h)

During the course of the program seminars were held to address topics of relevance:

1. “Insurance Protection Gap and Financial Literacy” — Presentation and Interview with the Chairman of the Portuguese Insurers’ Association (APS), Eng. José Galamba de Oliveira (inaugural seminar);
2. “How to lead innovation and transformation in Portuguese insurers” — a seminar featuring the following guests: Sérgio Carvalho – CMO at Fidelidade, José Francisco Neves — CMO / COO at Allianz, Manuel Pinto — CIO of Generali Tranquilidade, and Paulo Padilha – CIO, Prévoir; MC duties handled by Nuno Castro (Partner | Insurance NTT DATA);
3. “The role of regulation and oversight in the context of digital transformation”: a seminar organized by the Insurance and Pensions Fund Oversight Authority (ASF), introduced by the chairwoman of the ASF, Dr Margarida Corrêa de Aguiar, featuring a roundtable discussion presided by Dr Diogo Alarcão, ASF Administrator, likewise featuring the participation of Dr Paula Alves — ASF Department of Mediation and New Channels (Digital Business Models); Dr Eduardo Pereira, Behavioural Oversight Department of the ASF (Consumer Protection in the Context of Digitization); Dr Nuno Alpalhão, ASF Office of Planning and Organization (Suptech and Artificial Intelligence); and Dr Ana Byrne — ASF Risk and Solvency Analysis Department (Digital Operational Resilience).
4. “Digital Transition and Transformation in Insurance” — closing/summary seminar, led by the Program Director, featuring three guests from outside organizations: Dr. Miguel Guimarães, Assistant-Director APS, Eng. Hugo Alves of Silva | Delivery Manager – Insurance, NTT DATA Portugal, and Eng. Luis Cardoso — Consultant and Coordinator of the APS Digital Transformation Program.

The program yielded very positive recognition and assessment indicators, for which reason there will be a second edition of the program in May, structured very much like the first.

In lieu of conclusion, it should not go unsaid that the financial sector, and insurance especially, is one where innovation and digital transformation can bring the greatest impact, especially with regard to AI/gen AI use. However, a recent study by an international consultancy⁽¹⁾ points out that, where the insurance sector is concerned (excluding health lines), the maturity index of gen AI use is still quite low. While 50% of managers present average maturity on the subject of gen AI (40%) or high maturity (10%), another 50% display low maturity (40% at low to no adoption and 10% at low maturity), which contrasts negatively to other sectors, especially banking, retail, and technology.

It is imperative to change this and enlighten insurers on the importance of digital transformation — an inevitable change. In-depth knowledge of insurers’ business models is the starting point for a good change but, when we discuss digital transformation, we must always think strategically (a to z) and execute carefully, step by step, to ensure effective, correct implementation.

⁽¹⁾ BCG and GLG IT Buyer Pulse Check 7.0, March 2024