While slow to start, the insurance industry has embraced digital transformation—in large part due to new competitors such as insurtech startups and platform companies entering the arena. Nearly all the insurance executives in our survey envision a digitally transformed industry five years from now. The challenge for incumbents will be balancing digital services while also maintaining the personal touch that is foundational to the industry.
Insurers have been able to cut costs thanks to technology, though that’s not the key driver for digital transformation. Executives expect technology to improve their competitiveness by improving employee retention—key in an industry experiencing a high turnover rate—and customer loyalty.
Digital technologies have enabled insurers to improve operations efficiency and it’s clear that executives also see technology transforming the front-end of their businesses, enhancing customer relationships and boosting growth.
Which technologies will have the most impact on insurance companies now and in three years?
Artificial intelligence, blockchain and the future of insurance
While cloud is having the biggest impact on business now, insurers see artificial intelligence and blockchain playing major and evolving roles in the future. As a relationship business, insurance can surely benefit from figuring out how artificial intelligence and machine learning can enhance customer service and the customer experience.
Insurers also see themselves investing significantly in customer-facing blockchain and internal blockchain applications within the next three years, with nearly half of respondents saying they will invest in internal blockchain in the near future.
The hurdles of legacy systems and IT siloes
To realize the full value of their technology investments, insurance companies must overcome the obstacles to growth presented by incompatible legacy technology. Forty-seven percent of survey respondents also say lack of collaboration with the IT function is preventing them from realizing their technology investments’ value.
Another important hurdle to address is related to the workforce. Ninety percent of insurers expect digital innovation to cause a significant headcount reduction. These concerns also stand in the way of digital transformation across financial services, yet four in 10 insurers expect their technology investments to improve employee retention and satisfaction, reducing turnover.
Read more about the survey results and learn what specific actions insurers should take to strike a balance between investing and implementing digital technologies and maintaining a personal touch in the full report below.