How technology can support insurance business growth
Simon Michie, CTO at Redcentric
In the fast-paced business world we live in, it’s never been more important for companies to utilise technology which adds value to their service offering, increases internal efficiency and maximises the customer experience. This is especially true in the competitive and fragmented insurance industry, which often relies on the Cloud to facilitate growth. However, worryingly research shows a staggering 82 per cent of insurers feel their firm’s growth is hampered by their existing technology.
As is the case across other industries, legacy systems are holding back many insurance firms which are accepting ‘good enough’ IT, rather than striving for greatness. Whether this is due to them not realising the vast opportunities updating technology can offer, or the cost associated with such activity, is up for debate. However, it’s clear the time has come for those stagnant insurers to either embrace digital transformation, or face failure. Simply put, maintaining legacy technology while managing application sprawl and meeting evolving customer expectations creates an environment in which growth is almost impossible.
Competition is fiercer than ever – with insurance businesses facing threats from global competition and new born digital start-ups which aren’t weighed down by the operational baggage of older, more traditional systems. It’s therefore vital insurers are looking at ways to work as efficiently and effectively as possible, and technology has a key role to play in helping them to do so.
Time to upgrade
More than three quarters of insurance firms are either planning for growth, or have recently experienced a merger and acquisition but running on technology that doesn’t facilitate this type of change. It hinders it, or in some cases stops it dead in its tracks. For example, those insurers using operating systems which have reached end of life will inevitably meet issues along the way, which all too often results in the IT team dropping everything to resolve problems as the original provider no longer offers customer support.
Similarly, if off-the-shelf software, which a firm relies on to service its clients fails after the warranty has passed, either it has to invest in a new system or begin firefighting the issue internally. Sadly, the latter is frequently the path chosen as it’s deemed to be the more cost-effective approach. However, if the IT team is forced to focus solely on resolving one issue, it isn’t adding true value to the business. The same can be said for the rest of the workforce, if off-the-shelf software is malfunctioning, productivity drops rapidly and ultimately growth targets will be missed.
To ensure insurance businesses are running as effectively as possible, it’s key they begin embarking on digital transformation projects rather than either attempting to fix issues internally or buying more off-the-shelf software which is just ‘good enough’. It’s time for insurance firms to move away from constraining technologies and create their own tailored systems which fit their exact needs. Only then can productivity rise, resulting in an ability to take on more clients, increase revenue and drive growth.
In the mobile age we live in, it’s unsurprising to see 81 per cent of insurers support mobile working. Embracing the cloud is key to driving increased efficiency and therefore growth as ensuring employees can continue working while commuting to external meetings has a vast impact on productivity levels. However, to truly transform an insurance business it isn’t enough to focus solely on internal technology.
Although the first step towards the insurance firm of the future is updating internal technology to drive efficiency, simply being efficient doesn’t drive sales. As with most consumer-facing sectors, insurers live and die by their customer experience. If one firm has disrupted the market and offers a truly seamless, mobile insurance experience, why would someone partner with a more traditional insurer charging the same fee?
Insurance firms must look at the latest technology trends in the market and consider how best to utilise them. For example, mobile device usage is now more prominent than desktops for the first time. Creating systems which aren’t mobile-friendly is therefore counter-intuitive and will result in a loss of clients as they become disenchanted with the service.
In today’s digital age, it shouldn’t be a question of whether a system is mobile-friendly, instead insurers should be looking at how they can offer an app which pushes the envelope further than the competition. Just look at Aviva, who last year hired a chief designer from Call of Duty producers Activision in a bid to gamify its insurance offering. Such a step may appear strange for a traditionally straight-laced sector, but by taking such a stance Aviva can ensure it remains at the top of the insurance ladder. Smaller firms must begin thinking in the same way, or risk being left behind.
Embracing digitalisation for growth
In order to embrace digitalisation to facilitate growth in such a competitive and fragmented industry, insurance organisations must create the right balance between exploiting new technologies to deliver efficiencies, whilst also controlling application sprawl and maintaining operational standards.
Clearly, growth can be hindered by legacy systems – 37 per cent of insurers have confirmed their incumbent systems are not agile enough for any expansion.
The different roles within the industry have different requirements. Take brokers for example, for whom customer engagement is key. For them, controlling and managing the digital experience to increase client satisfaction, while minimising transaction costs is paramount. Alongside this, they must work with aggregators to ensure personalised insurance premiums are calculated quickly, while utilising data analytics and external data feeds to facilitate a sleek and streamlined service. Firms struggling with outdated or disparate technical infrastructures may be left behind when it comes to providing the type of multichannel, client focused services which consumers have not only come to expect, but now demand.
So, what is the best way for the industry to prioritise investments and balance these with the spend already being allocated to supporting legacy systems?
A cloud-based hybrid approach provides the perfect platform for growth, whilst offering insurance companies the opportunity to embrace digitalisation at their own pace, maximising the return on investment from existing assets and making way for the fiscal and operational advantages a hosted solution brings.
Cloud computing can deliver real bottom line benefits, however those are best achieved by taking a strategic approach. This will allow insurers time to analyse what the business wants and needs from IT. By knowing that and having a clear strategic direction the IT model can be aligned with the overall business model and in turn help to secure greater success. Cloud projects can therefore be taken on, tested and trailed to ensure they are delivering the kind of outcomes the business expects before committing to a larger scale transformation.
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