The future may be hard to predict, but need not be hard to prepare for. Insurance are grappling with thetough new business, investment and regulatory environments that are emerging from the financial crisis.The industry, however, also faces far broader challenges. Demographic shifts, the rise in power of theemerging markets and changing customer behavior will all help shape the sector’s longer-term future.
Digital technology is a global megatrend which is transforming a variety of industries that includes the insurance sector. Insurance sector has been a bit slow to IT adoption due to rapid changes in technology and because their distribution channels are still conservative, i.e., handled by agents and brokers and were in fact not ready to adopt new technology. However, digital technologies adoption by customers that include social media, smart phones, electronic transactions, etc., enabled by cloud service models, e-commerce and mobility are making an impact on the technical and commercial capabilities for many insurance companies. Insurers are quick to capitalize on this trend.
The factors that we believe bringing these changes can be categories in:
Social: The balance of power isshifting towards customers.
Technological: Advances in softwareand hardware that transform ‘bigdata’ into actionable insights.
Environmental: The rise ofmore sophisticated risk modelsand risk transfer to address theincreasing severity and frequency ofcatastrophic events.
Economic: The rise of economic andpolitical power in emerging markets.
Political:Harmonisation,standardisation and globalization of the insurance market.
Key business drivers for IT adoption in insurance:
Engaging customers using multi-channels of customer interaction and include all age segments
Devise strategies to include the growing investments in internet and mobile channel strategies for faster and instant communication
Collaborate with partners to launch innovative products in areas such as micro-finance, wealth management, etc.
Automate underwriting processes using data analytics and business intelligence (BI) and predict real time fraud analysis, risk analysis
Leverage Bancassurance banking systems and regulations available in each country to explore cross-selling of insurance products, particularly in emerging markets like India
While 63% of insurance businesses report that they are ready to move towards more digital practices, only 23% of these businesses are ready, reports a joint Forrester and Accenture study. To accelerate this process and ensure successful transition to digital workflows, there are a few key areas we can expect insurers to embrace as they seek to create more automated, user-friendly processes.
Embracing a cloud-based and on-premise infrastructure
Just two years ago, 84% of companies were operating in the cloud and more. Than half of these companies reported that the cloud reduced the amount of work from IT teams, says PC World. Still, IT teams in the insurance sector struggled with. What information is allowed by regulators to be stored via cloud vs. on-premise. To add to this, the proliferation of legacy technology is challenging the cloud-based-only approach. Many insurance entities are running off 40-year old administration technology designed to manage the claims process, says a recentTrustMarque report. This kind of technology is hindering innovation, but insurance agents are far from instantaneously replacing such mainframe technology.