In its ongoing conversations with UK insurers global research and consulting firm, Celent, maintains that a topic of particular importance within the industry at the moment is that of innovation. Its recent survey highlights UK general insurers’ interest
“Celent’s discussions with insurers suggest that the idea of disruption - where technology shifts the productivity limits - is of particular interest to insurers, however lack of resources coupled with risk-aversion thwarts the process of moving such a strategy forward,” comments Collins. “Interestingly, to overcome this, an increasing number of insurers are setting up ‘innovation teams’ which sit outside IT, but to which IT is one of many contributors. This suggests a clear move towards an internal culture of collaboration where IT can make a valuable contribution in coming up with new ways to solve business problems.”
In terms of emerging technology adoption and more specifically cloud, Collins says that most insurers are still debating its commercial viability. “In the UK and Europe more insurers have adopted cloud based solutions and have invested heavily in new hosting facilities to cope with the future growth. However, locally there is some concern among insurers over the infrastructure available and they are still debating the merit of using cloud for core services,” he says.
Collins says locally insurers are, rather making use of cloud for noncore applications such as sales, finance, HR and Solvency II systems. “While cloud is considered a good option for development and testing, most insurers are constrained by legacy environments and large risk models are not considered compatible with a cloud ecosystem.”
When it comes to social media Collins says unlike in the UK, very few insurers currently have a social media policy as insurers are concerned about sensitive information getting into the public domain. “There will most certainly be a much greater use of social data in claims and underwriting in the future, but at the moment we’re mainly seeing insurers with large personal lines books using social media as the first line of communication with their customers,” adds Collins.
On the topic of mobility, Celent’s discussions with insurers indicate that very few insurers have websites compatible with mobile technology and Collins says that here the local insurance industry is again lagging. “The question is no longer merely which components of the vast mobile technology landscape to incorporate into individual insurance e-business strategies. Rather insurers needs to understand and embrace how to maximise the benefits of each unique technological environment to add value to their service offering, differentiate themselves and deliver competitive advantage,” he says.
For Collins the scope of opportunity that exists for insurers via mobile technology is limitless. “Insurance specific applications such as claims tracking, renewal notifications, loss assessments, risk assessments will not only do much to enhance the overall service offering but will become essential to success within the industry,” he adds. “User-friendly websites and brand visibility on different platforms is not enough anymore. Consumers want to and will soon expect to engage with their insurer via mobile applications. Those that don’t have these applications on offer when their more innovative competitors start rolling them out can expect to be left behind and lose market share.”
Overall while insurers want to integrate new technologies as part of their existing business environment and value chain, Collins says they are also looking to minimise the risk of disrupting their existing business. “In the end insurers can’t resist change. They will need to dramatically transform their value chain which will require drastically shaking up their existing business processes,” he comments.
The good news is they don’t need to do everything at once and can rather opt for an evolutionary approach to legacy modernisation, such as SSP’s Enhance and Evolve approach. This approach supports business transformation and innovation, by providing a framework for insurers to address their most urgent business priorities while extending the life of existing core systems. “This approach enables insurers to be more dynamic, adopting new and emerging technologies within their existing legacy environment through access to best of breed components. For many this will prove the best way forward when considering IT modernisation,” concludes Collins.