Driven by intense competition, rising consumer expectations and general digital disruption, the insurance industry is entering a new age of innovation. But what does it take to be an innovative insurer, what does it look like and why does it matter so much?
In a global survey of 500 insurance professionals by bespoke market research firm Raconteur, sponsored by FIS, nearly 80 percent agree or strongly agree that their business needs to innovate in response to key business challenges. And another 86 percent fear that if they don’t focus on innovation, they will lose market share.
The research goes on to show that customer satisfaction and competitive advantage top the list of reasons why insurance companies believe they must innovate. They also seem to know how to go about it – recognizing that technology will be key to meeting customers’ requirements in the digital age. In fact, almost a third of those surveyed concede that digitalization of processes will benefit their firm more than any other innovation – and a further quarter say that competitors’ digital processes pose the biggest threat to their business models.
Currently, however, there is a major gulf between aspiration and actuality. More than 99 percent of insurers admit to facing obstacles when it comes to delivering innovation. Those obstacles mainly are a result of inadequate planning, budgetary constraints and ineffective organizational structures. But the biggest obstacle to keeping pace with digital change, according to almost three-quarters of respondents, is the complexity of legacy systems.
One option is to look to the cloud – and in fact nearly 30 percent of insurers in the survey have already taken advantage of cloud technology to streamline their infrastructure and improve data management. More broadly, over half agree that they will adopt some kind of managed service by 2020, showing a willingness to embrace a more innovative operating model, albeit gradually.
More urgently, perhaps, firms must address the issue of connectivity. To make real progress on their digital journey, not to mention achieve compliance, insurance companies will need to achieve greater levels of collaboration between their different functions. But Raconteur’s research suggests that too many firms still operate in their silos – and as a result could be missing important opportunities to mine, share and analyze data, for not only compliance but also a competitive edge.
I would argue further that taking full advantage of data may be the most important innovation a firm can make. By mining the vast quantities of information at their disposal, they have the potential to better tailor products to their customers’ requirements, manage risk most effectively and encourage optimal risk behavior. But why not take a look at all of the evidence and make up your own mind? Email us for your complimentary copy of The Innovative Insurer – How to Get Ahead in the Digital Age at firstname.lastname@example.org.
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