Life carriers take slow approach to digital transformation
About half of North American life insurance companies operate without a digital strategy, according to new research from Gartner and the Life Office Management Association.
The month-long study, conducted in mid-February, finds life insurers are taking slow approaches to digitalization, as IT leaders push for innovation at firms reluctant to change.
Gartner and Loma’s joint report aimed to assess the impact of industry trends, such as insurtech disruption and IoT adoption, on IT investments and decision making. Fifty-one life insurers were surveyed as part of the study. Each is a member of LOMA, which offers employee training and development programs to carriers.
"While other insurance sectors, such as property and casualty and health, are transforming at a faster pace, the life insurance industry continues to be more risk-averse and traditional in its business approach," saidstudy author Kimberly Harris-Ferrante, vice president and distinguished analyst at Gartner.
Overall, 49% of respondents admitted to lacking a digital strategy, with 37% of those companies disclosing plans to develop one immediately. The issue for life insurers remains a lack of maturity in their digital efforts, the study says. Most companies have only been implementing their strategies for a few years. Transformation plans are often too conservative as well, predominantly focused on back-office improvements or customer service rather than advanced technologies like big data for underwriting.
To rectify concerns, Gartner and LOMA recommend life insurance CIOs:
- Expand digital strategies to include the development of new products.
- Assess business limitations prohibiting transformation due to legacy systems.
- Educate staff on potential industry disruption from insurtechs and emerging technologies.
- Create an innovation program with its own budget and staff, leading to more creative thinking throughout the company.
"Our research demonstrates that companies that do not aggressively establish an enterprise-wide digital program will fall behind, leaving them vulnerable to traditional and nontraditional competitors,” said James Huffman, second vice president of management solutions at LOMA.