Digital innovation has a huge role to play in improving insurers’ operational efficiency, customer experience, and product and service development. The pandemic has highlighted this, while also bringing new risks, including growing cyber threats and potential burn-out among pressured IT teams.
Customer enquiries and claims have surged during the pandemic, adding pressure on insurers at a time when staff and operations were transitioning to a remote working model. While Switzerland’s insurance companies handled the situation well, it has shone a light on areas where more investment is needed in technology to enhance efficiency and the customer experience. Our latest global CIO survey makes interesting reading in this regard. Let’s take a look at how and where insurers should continue their digital journeys.
We have seen some great examples of digitalization over the past year – particularly in the retail insurance segment, where the Swiss market has introduced real innovations in client interfaces. But as technology continues to advance rapidly, there is always more to be done.
In my experience, insurers look to technology to help them improve in three key areas: operational efficiency, customer engagement, and new product and service development. This translates into investments that promote automation, cyber security and data privacy, and specific solutions to enhance the customer experience.
These focus areas are echoed by the insurance respondents in our global 2020 Harvey Nash / KPMG CIO survey. With 4,200 responses from CIOs and technology executives across 83 countries, it is the largest IT leadership survey in the world. You can read its findings here.
As mentioned, operational efficiency, customer engagement, and product and service development are at the center of insurers’ technology ambitions. Here’s my quick take on where they should focus in each area:
Operational efficiency: Investment in connected platform technologies and automation throughout the front, middle and back offices would be especially helpful. I see potential for AI to reimagine call centers and claims handling as customers across personal and corporate lines become more comfortable with – and actually expect – more flexibility and self-service.
Customer engagement: I observe how digital initiatives pay off when services are personalized, user-oriented and put the client at the center. Encouraging client loyalty also helps insurers to increase share of wallet.
Product and service development: Digital innovations can improve agility and speed to market, and provide data insights for new insurance products and services such as usage-based insurance and cyber threat coverage.
The cyber theme is one of the most interesting and urgent areas for attention.
During the pandemic, 91 percent of the global insurance workforce moved to remote working.
This caused a dramatic increase in insurers’ exposure to cyber risk. The number of insurers reporting an uptick in cyber security incidents rose significantly, with phishing and malware attacks being the most commonly reported incidents.
A priority needs to be on addressing internal threats stemming from a largely remote workforce and new suites of applications. Insurers must build significantly greater resilience in the face of such risks, which are likely to intensify going forward.
Cyber security is the number one skills shortage for insurers, according to almost half of insurance CIOs in our survey. Finding sufficient employees with the right digital skills is not only an insurance problem – many industries face the same challenge, which creates even more competition for the best talent.
Once you have attracted skilled employees, the next question is how to retain them. Speaking to IT leaders at insurance clients, they recognize how the pandemic has coupled with a constant stream of transformation initiatives and changing operating models to put a severe strain on their IT professionals. Avoiding burn-out by implementing health and well-being programs is key.
We’re fortunate in Switzerland to have a fantastic ecosystem we can draw on, including a wealth of Swiss-based cyber security firms and insurtechs. They support a healthy flow of skills, knowledge and expertise that established insurance groups can leverage to complement in-house resources.
Transformation won’t stop. It’s a continual state in progressive insurance companies. As well as shoring up cyber resilience, technology is more central than ever to building competitive advantage and sustainable growth. Many of our clients in Switzerland are looking at a range of initiatives to modernize claims management, improve underwriting in both retail and commercial insurance, and achieve better reserving in non-life insurance. On that note, I am happy to share our insights into these areas – and the impacts of evolving technology on the insurance value chain more broadly – in Clarity on Insurance, which is hot off the press and which you can read here.