For years, insurers didn’t consider outdated technology as a top risk. Now they say it’s the greatest threat to their business. This is according to the Centre for the Study of Financial Innovation (CSFI) and PwC’s recently released survey results of the top risks facing the global insurance industry. The biennial “Insurance Banana Skins 2019” report is based on 927 responses spanning 53 territories. The series was first launched in 2007 and ranks the “banana skins” or risks facing insurers.
Outdated technology infrastructure tops the list as the No. 1 threat for the next two to three years. The rank is a jump from the No. 3 spot on the 2017 survey, which was the first time technology ever made the top 10 of a Banana Skins report list. Insurers in all regions—Europe, North America, Asia, and Latin America—ranked technology as their No. 1 concern.
Other findings from the survey include:
- By subsector, life and non-life insurers also felt technological change is their top concern.
- Reinsurance felt the most prepared to handle the risks compared to other insurance sectors, including property and casualty (P&C) and life.
- Other technology-related risks to the global insurance industry include: cyber risk (No. 2), new competition (No. 7), and recruiting talent (No. 8).
The PwC and CSFI report writers say that the overall tone of the responses this year are the most negative since the series launched. “This is largely due to the scale of the challenges facing the industry through technological and structural change, and concern about the industry’s ability to manage them successfully,” they say. “The results should also be seen against a background of growing economic uncertainty around the world, and heavier regulation.”
Here at Workday, we think the survey results are a wake-up call. For years, insurers were squeezing the life out of their legacy systems as a way to avoid high replacement costs. Now, as the survey results indicate, insurers across the industry realize that technology underpins much of their business.