That’s the finding of a new survey by consultant Willis Towers Watson, released in January.
The New Horizons research surveyed 200 senior-level insurance executives across EMEA, the Americas and Asia.
The survey aimed to ‘map the changing attitude of insurers to digital technology and to examine the extent to which companies are using M&A strategies to realise their digitalisation ambitions’.
The findings show that 10% of insurers believe they are ‘significantly behind’ other sectors when it comes to adopting technology. Within the industry, life insurance firms are the most likely to think this – 11% believing they are significantly behind.
Health insurers are the most positive about their adoption of digital technologies. 20% of health insurer respondents think that they are ahead of other sectors.
Overall, just 1% of those surveyed believe their company is significantly ahead of other financial sectors, and 10% think they are significantly behind.
Source: Willis Towers Watson
Barriers to digital transformation in insurance
When asked why they were failing to capitalise on the technologies available, ‘complex regulatory requirements’ were cited as the biggest barrier to adoption. 42% of respondents cited this as their most significant obstacle. Perceived customer resistance was the next biggest challenge (cited by 32%), with low frequency of contact between firms and their customers seen as the main disincentive by 22%.
Presumably this relatively low degree of contact means that insurers do not have the same drivers for digital adoption as – say – banks. Customers expect to be able to engage online or via mobiles with their banks. This has led the banking sector to adopt digital methods of communication –apps, texts and user-friendly online services.
Insurers do not face the same degree of pressure to do likewise – although the FCA’s Smarter Consumer Communications project is encouraging firms to take a more engaging approach.
Reluctance to take a lead on digital
74% of insurers questioned believe that the sector is reluctant to show leadership in digital innovation. Perhaps this is due to the high level of regulation they face – adding a layer of complexity to any project. The very public penalties for anyone who fails to meet regulatory requirements may also play a part.
As Fergal O’Shea, Willis Towers Watson EMEA life insurance M&A leader says, ‘Technology has historically been viewed as a risk to successful execution rather than an enabler’.
How can insurers capitalise on the potential of digital transformation?
There’s no doubt that the technologies available offer huge potential for every sector – in terms of efficiency, effective delivery and customer service.
Perivan Technology’s blog on the Top 10 digital transformation trends for 2017 highlights some of the key areas where technology will have an impact over the next 12 months.
And there’s no reason the insurance sector should be left behind. This blog on How to adapt for the digital age: 5 tips for regulated firms shows how you can innovate in a way that’s compliant with FCA or PRA requirements.
Insurers can also take tips from Perivan Technology’s blog on How to exploit digital transformation in banking, which explores many of the same issues the insurance sector will face, including:
- The need to build a business case and get board-level support for your plans
- The importance of building a leadership structure that endorses organisation-wide transformation
- The benefits of working with other sectors and firms – including so-called fintech ‘disruptors’ – to understand the opportunities and develop your approach
Taking one step at a time towards transformation
So, if you work in insurance, and your firm isn’t yet ready to take a digital approach to customer communications or operations, where do you start?
Automating your marketing workflows is one way of ‘dipping your toe’ into digitalisation without the need for a major communications or operations project. Adopting an automated approach to marketing workflows can:
- Improve marketing project management
- Minimise admin
- Reduce Compliance approval times, speeding products to market
- Cut the time it takes to produce financial promotions
- Reduce regulatory compliance breaches
Could the benefits of automated workflow systems help you?
Source: Perivan Technology
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