Amid a once-in-a-century global pandemic and an uptick in natural disasters, insurers have kept doing what they do best: predict and protect against volatility. And all the while, they’ve integrated new technologies to deliver more efficient claims processing, improved customers’ digital experience, and supported increasingly hybrid and far-flung workforces.
But recent innovations also underscore a stark reality facing insurers: The future of the industry will see accelerating change on multiple fronts, from digital capabilities to customer expectations. To thrive in increasingly complex operating environments, insurers must become digital leaders.
For starters, that involves casting aside legacy, on-premise systems to embrace cloud-based technologies that support a range of competitive advantages, including data-driven decision engines, tailored customer experiences, and a tech-savvy workforce.
And while each insurer’s path forward is unique relative to its position in the market and strategy, insurance leaders are in agreement about one thing: an inflection point has been reached when it comes to the value of insurers’ adopting new tech to drive change.
“Having many years of working in the insurance industry, understanding not only the trends but also the regulatory environment, we see that the forces occurring inside this industry can be solved through technology. It’s up to us to really bring that to the table,” said Dave Zager, a partner in the Workday financials practice at Deloitte, on a recent Workday Podcast.
Firms that take the plunge and modernize their core systems can expect a range of benefits across operations, strategy, customer experience, and talent management. Insurance experts and leaders say there are four key areas the industry should focus on in the coming years, and they are certain that cloud-native technologies will help power change.
Tech Advances and Regulatory Requirements Spur Insurers to Future-Ready Their Data Systems
Drones are now inspecting disaster areas. Customers can upload their own photos and videos to mobile apps to facilitate claims. And the proliferation of smart sensors and other Internet of Things (IoT) devices has broadened insurers’ risk assessment and fraud prevention abilities.
However, many insurance firms are leaving value on the table when it comes to analyzing data to unlock insights about customer behavior and the costs of risks. In large part that’s due to technical debt from relying on clunky, time-intensive legacy systems.
No wonder that Workday’s Digital Acceleration survey found that 62% of executives at financial services firms believe the single most important factor to improving their ability to make data-informed decisions will be technology that breaks down silos or unifies financial, people, and operational data.
Expect change to speed up on this front—updated regulatory and accounting requirements, which place undue stress on outdated legacy systems and inefficient processes, will help firms push past inertia to retire debt and put true data-driven systems in place, Zager explained. Recent technological advances will also make change irresistible.
“Over the past couple of years, a lot of the technologies and capabilities in the market have been enhanced to focus on data and how to harness it to drive value for the organization,” Zager said.
Moreover, artificial intelligence (AI), machine learning (ML), and cloud-driven technologies will increasingly help insurers set up more efficient and automated underwriting and claims settlement processes backed by data-driven decision engines, according to KPMG’s “Future of Large Commercial Insurance” report.