Insurers 'catching up' on digital transformation
Insurers lag behind banks in going digital, but all financial services sectors are struggling with the transition, according to a report from the Capgemini Research Institute.
The "Where are banks and insurers on their digital mastery journey?" report, following up on a 2012 survey on the same topic, found that financial services firms of all kinds report less confidence in their digital capabilities and leadership. Only 30% of insurers said they had the digital capabilities they need from a tech standpont, and 28% said the same about leadershiop, about 10% below the financial industry average on both counts.
A total of 360 people across 213 organizations were surveyed for the report, including 169 insurance respondents at 88 carriers. Ranked by their mastery of digital technology and leadership Insurance had the highest percentage of digital beginners (56%) and the lowest amount of digital masters (27%) compared to all sectors. However, the lag behind banking was less than 10% in both cases.
"An older demographic, underwriting expertise, and regulatory requirements have somewhat shielded the insurance industry from disruption," Capgemini wrote "However, the industry has now reached an inflection point."
There was one area where insurers took a leadership position on the digital journey: automation. Forty-two percent of insurers said their operations are "highly automated," a one-percent lead over banking. This includes RPA and AI, which were cited as top technology priorities in previous Capgemini research by two-thirds of insurers each.
Insurance's digital leaders share some other characteristics, according to the survey:
- They are "focused on extracting real-time and actionable insights to optimize products and customer engagement, with 79% of insurance digital masters pushing customized offers that closely meet the wants and needs of consumers" especially by leveraging open APIs, the report says.
- Leaders also "focus on agile business models, and are quick to test ideas, fail fast, and learn faster," Capgemini says. Two-thirds of leaders say they use the proof-of-concept and/or minimum-viable-product model in their ideation.
- Insurance's digital masters also tend to have digitally focused units with KPIs related to transformation metrics.