The insurance world is awash with talk of digital, big data, data analytics. The whole insurance value chain is impacted, from distribution to intermediation, risk carriers and service providers, as other industries from e-retailers to automotive set foot in insurance markets, and pension funds and hedge funds finance capital market solutions. At the center of this transformation into a more connected world are customers, whether consumers or corporates, who expect to be able to select from the products of a vibrant marketplace defined and driven by their needs, preferences and convenience.
Facing complex technology challenges
Insurance executives globally are trying to work out what all this means for their customers, their operating models, their bottom lines. Some of the best are finding ways of harnessing the power of digital to drive change and improve customer experience. Some are struggling. Some may have other priorities!
KPMG commissioned a global research to provide up-to-the-minute feedback on the challenges insurers face. What we found was not surprising: an industry struggling to resolve decades-old infrastructure choices and make meaning of potentially game-changing and disruptive technologies. Many players face complex technology challenges, without confidence that their decisions will reap the desired benefits.
One of the most interesting findings from the Transforming Insurance survey was that, while 69 percent of the survey respondents now have a digital strategy beyond their website, only 37 percent have wholly aligned their digital initiative with their strategic objectives.
What are the specific challenges that we see globally?
Old systems and behaviors as a barrier
A poignant irony is that many players collect and store large volumes of their own internal data (for instance in the actuarial area) – but they are unable to extract the full insights available. Unfortunately with antiquated technologies and legacy systems, they struggle to achieve a happy marriage between new analytical capabilities and the vast amounts of data from digital sources. Deep-rooted cultural norms also stifle progress. In a highly regulated market, insurers and intermediaries are wary of risk and have built very conservative IT groups with highly structured data governance and rigid project management disciplines. All of this acts as a barrier to easily exploiting the power of data. And we certainly see this phenomenon in the Swiss market – old systems and behaviors which act as a deterrent to data sharing and development. This of course is coupled with above average returns and historically strong brand loyalties. Perhaps at the moment, some executives see the priority need is to improve performance and functionality – modern data-driven strategies can wait for another day. However, this assumes that the competition sees the world in the same light – a dangerous assumption.
How can a firm enable digital innovation?
Interesting digital times lie ahead. Even the relatively cosy Swiss market will have changed in 20 years!