Regulatory change is slow in the insurance industry, yet the technology to serve it and other verticals keeps advancing at warp speed. In a recent survey of hundreds of senior technology leaders and business decision-makers across multiple industries, many technological efforts stand out that will propel insurers and similar financial service organizations to reduce operational costs, better engage with its customers and improve efficiencies.
At the end of 2021, these tech and business leaders sounded off with views on their daily challenges, issues that tech can address and opportunities they see on the horizon. Top among them is the changing American demographics.
Generation X commands more than 20% of today’s U.S. marketplace, and Gen Z is quickly growing. Taken as a single group, these consumers are adept at modern commerce tools and–especially Gen Zers–fully expect businesses to offer a robust technological experience. Today’s youngest adults have spent their entire lives with smartphones.
They are more interested in self-serve interactions, have access to real-time information, earn more disposable income and are more informed about their financial choices. This group boasts more independent thinkers than past generations because it's been exposed to more worldly views through the power of modern communications. Thus, they feel empowered to guide their financial independence.
Cloud over conventional
Insurance and financial leaders recognize they must structure their products and services to meet this market segment. Leaders wish to spend more time crafting and launching these services than thinking about how they will do it. Ergo, cloud technology ties in seamlessly with this goal.
Fifteen percent say moving to the cloud will be their top technology expense in 2022.
The concern is diminishing that the cloud cannot serve within existing regulatory frameworks. However, efforts to reduce risks from storing data here remain hyper-focused. Converting segments of operations such as human resources, administrative, accounting and other compartmentalized functions are steps insurer leaders recognize will bring them up to modern speed while still reducing costs associated with hosting in-house all the data related to their companies.
One of every five insurance leaders identified improving operations while reducing costs as their greatest challenge.
Technology transformation also affords insurers the ability to scale more quickly and launch products and services using reusable cloud components and architecture. While automation was always prevalent in the Insurance industry, executives are now moving to intelligent automation that can accommodate rapidly changing processes and disparate data.
Power of automation
Higher computing power at lower prices through the cloud gives insurance companies the means to create and operate complex systems, distribute applications to improve customer experience, keep up with changing compliance regulations and quickly adapt to changing business processes. Relieving those burdens allows insurers to direct resources on what they do best: innovate and improve products, deliver exceptional customer experience and enhance investment and investor value.
Insurance leaders also responded that the influence of artificial intelligence and machine learning on their operations and customer data would significantly improve efficiency in underwriting, claims and fraud protection and enhance personalized customer services.
It’s no surprise that protecting customer information and cybersecurity is the top business value proposition among insurance executives. Of 15 different key drivers of business value identified, insurance leaders named cybersecurity the most prominent 15% of the time. Only cloud migration (11%) and bringing AI into operations (10%) gained similar double-digit recognition.
Reducing the risks associated with information breaches continues to grow, but cybercriminal attempts to break into that information increase, too.
Leaders want security built into the apps and integration solutions they adopt rather than patching existing weaknesses. With a trillion dollars of data crime covered by insurance over the past two years, there’s as much economic interest within this industry as any other to aggressively pursue reductions in liability and exposure to cyberattacks.
Healthcare and financial services are eyeing blockchain technology to secure their respective data and gain a competitive advantage. Insurance providers can look at these examples of integrated measures that strengthen cybersecurity in highly regulatory environments, involving enormous sums of personally identifiable information and wealth.
Like their healthcare and financial colleagues, nearly 20% of insurance thought leaders report using such new-age technology to draw value-added insight from their data resources to compete more effectively.
See also: 20 Insurance Issues to Watch in 2022
Technical debt investment
Finally, the need to reduce technical debt among their systems is the single most significant demand business leaders wish to be remedied pronto. However, this debt finds its genesis in patchy technology transformation initiatives of the past that were designed and implemented with little to no thought on their sustainability. Three of every four executives expressed concern over their technical debt and are seeking a solution as these debts start surfacing in their balance sheets.
The reasons are simple: Finding the technical skills necessary to keep legacy systems properly functioning gets more challenging every year. The new staff is hesitant to work on technology that’s past its due date and unfamiliar to them. And piecemeal patches to sustain legacy platforms ultimately result in more time, effort and money than is economically defensible.
Businesses seek the most significant returns on investments. Their leadership demands it. Crossing the boundary and adopting more automation, cloud storage, artificial intelligence and machine learning use into its operations can deliver those competitive results. Insurance and other business leaders recognize this. The sooner they make the transformation, the quicker their digital transformation will pay off.