What are the key challenges that drive digital transformation (DX) in insurance companies?
The increase in customer demand for anytime-anywhere insurance buying and servicing experience, increase in expectations from distributors for business on the move, rising competition from new entrants and non-traditional players (peer-to-peer insurers, aggregators etc.), balancing legacy maintenance costs while also investing in digital technologies, emerging threats such as cybersecurity breaches and the resultant changes in the regulatory landscape are the key challenges that drive DX in Insurance companies. Life and property & casualty (P&C) insurers have been traditionally slow to adopt new technologies compared with their retail or banking counterparts but we observe that insurers are increasingly looking at DX as key to address most of the challenges that the industry faces today and enable them to adapt to changing business requirements. The good news is that some carriers have already started strategic investments in transformative technologies to stay relevant in the market and remain competitive. Others are taking the cautious first steps.
For further details on the challenges that the industry faces today, its response to these challenges, the key technology investment trends, examples of innovation by forward-looking insurers and essential guidance on DX, please check out the IDC report Challenges and Trends in the Insurance Industry, 2016.
What are the barriers to DX in the insurance industry?
Insurers worldwide understand that to stay relevant and remain competitive during these challenging times, they need to transform their business and IT departments to gain greater integration and flexibility. Unfortunately, aging legacy systems, numerous manual processes, increased data protection and regulatory requirements, culture issues, lack of innovative mindset, talent shortage, and resistance for data sharing and utilization across business units all act as barriers to transformation.
Insurers across the globe realize that they cannot afford to wait for the perfect strategy to kick-start their transformation journey. The need of the hour is to build and deploy digital capabilities while also tackling the barriers. Forward looking insurers are doing exactly that.
What are the foundation blocks of DX in insurance?
IDC believes that the foundation blocks are a modern front office that enables omnichannel personalized engagement with customers and business on the move for insurance distributors, modernization of core IT that enables agility, agile infrastructure that enables safe and secure access to IT resources and free valuable resources for innovation, big data and analytics investments that help drive insights throughout the business units and leverage information for competitive advantage, and effective sourcing, deployment, and integration of internal and external resources and tools that help address the skills gap to achieve transformation objectives.
How can we assess an insurance company’s maturity in DX?
IDC MaturityScape: Digital Transformation in Insurance provides a framework for viewing stages of maturity across five key dimensions: Leadership DX, Omni-Experience DX, WorkSource DX, Operating Model DX, and Information DX. It is an important tool that enables both life and P&C insurers to assess their capabilities and stage of maturity in DX, enable a dialogue among business and technology executives about goals and actions relative to DX initiatives, identify areas of DX capability that require strengthening and establish standards for pursuing digital transformation initiatives. It also provides guidance to business and IT leaders to assess their current state and readiness to undertake DX as a competitive strategy. A future DX MaturityScape Benchmark report will summarize the findings of an IDC DX survey to be conducted with life and P&C insurers worldwide. Our upcoming report on Omni-experience DX MaturityScape in Insurance will identify the stages, dimensions, outcomes, and actions required for insurers to continually disrupt the customer experience and maintain market-leading performance.
To get more insights about worldwide insurance strategies, please contact Sabitha Majukumar.
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