Global insurers lack achievable digital transition plans: report

Singapore

GLOBAL insurers' lack of a concrete and realistic digital transformation plan has left a gap for upstart disruptive companies to fill with alternative products and solutions that aim to address customers' frustrations with traditional insurance offerings, said a Bain & Company report.

And while insurers are aware that they have to embrace technology as consumers' needs shift, almost half of those surveyed said they do not have an achievable plan. The Bain survey - Global Digital Insurance Benchmarking Report 2015: Pathways to Success in a Digital World - had sought the views of 70 life and property & casualty (P&C) insurers worldwide.

Three in five said key elements for the digital journey such as a clear vision or compliance and risk processes are missing. About 40 per cent of transformations among life carriers and 25 per cent among P&C carriers achieve fewer than half of the business objectives they set for themselves.

Harshveer Singh, leader of Bain's life insurance sector in the Asia-Pacific, said legacy technology systems, perceived conflict with channels, lack of right capabilities and, most importantly, a culture of innovation remain the key factors behind the slow digital transition locally and globally.

Life insurers expect IT spending to rise from 3.8 per cent of revenues to 5.5 per cent, while P&C insurers expect the climb to be from 3.7 per cent to just over 4 per cent of revenues, said Bain, adding that annualised spending growth on Big Data analytics over the next three to five years will reach an average of 24 per cent for life insurers and 27 per cent for P&C firms.

The heavier focus on such investments comes as insurers anticipate new premiums generated from digital channels to more than double in the next three to five years - from 6 per cent weighted average of new premiums to nearly 15 per cent in life insurance and from nearly 10 per cent to 22.5 per cent in the P&C sector.

But very few have complete omni-channel capabilities.

"In life (insurance), just over one-third of carriers allow customers to start a transaction in one channel and complete it on another; about 40 per cent of P&C carriers have that capability," the report found.

That said, the report noted that the most common missing systems most insurers intend to invest in include Big Data analytics, digitally enabled customer experiences and end-to-end customer relationship management (CRM) systems. A small group has also started to use advanced analytics to capture data points of interaction with customers, said Bain.

"Singapore is making headway in establishing itself as a hub for advanced data analytics and the insurance sector is perfectly suited to support this - issues of data sharing are easily sorted through proper frameworks and within bounds of privacy," said Mr Singh.

"As it is, much of the data used in the future would be unstructured, sitting outside of policy admin systems," he said, adding who added that Bain's research indicates that the use of Big Data analytics is expected to almost triple across functions and channels over the next three to five years, with biggest increases for product design, pricing function, and website and mobile channels.