Process complexity and data management is still ‘greatest operational challenge’ for brokers - AutoRek

In late 2022, AutoRek surveyed more than 500 professionals working in the UK and US insurance market. Our aim was to better understand more about the following areas:

• Strategic priorities and challenges.
• Back office operations.
• Technology and automation initiatives.
• Approaches to and difficulties regarding reconciliations, financial controls and data management.

Below are some key insights from our findings.

Strategic priorities are shifting in the global insurance industry

More than one-quarter of respondents revealed that customer experience, acquisition and retention and back and middle office optimisation were key focus areas for their business over the last two years.

Looking ahead at the next two years, however, firms plan to reduce their efforts across these areas in favour of ensuring overall operational resilience.

Operational challenges centre around process complexity

Almost 40% of firms surveyed pointed to process complexity as a material operational challenge. This number rose to over 50% for broking firms.

While process complexity is unavoidable in the insurance industry, respondents also highlighted efforts to overcome this issue. For example, around eight in 10 plan to streamline and optimise their operations over the next two years.

Planned technology budgets will target accounts receivable and operations

To accommodate regulatory requirements for Solvency II and IFRS 17, technology investments for the previous two years focused largely on finance and accounting.

Planned budgets for 2023 and 2024, however, will see reduced efforts across these areas in favour of accounts receivable and operations automation, which suggests that firms are looking to eliminate efficiency gaps in their back office and keep on top of bad debt.

Spreadsheets are still prevalent for financial controls

The global insurance industry still has some distance to go before it fully embraces automation.

More than a third still rely on spreadsheets for their reconciliations. These firms should note that replacing spreadsheets with end to end automation presents a golden opportunity to reduce operating costs and liberate staff from repetitive data work.

Drivers behind automation initiatives differ between subsectors

For 40% of respondents across both the UK and US markets, faster processing times is the key driver behind automation initiatives.

But responses differ slightly across subsectors - MGA and life insurers said that automation would bring them greater data confidence, while reinsurers believe automation would enhance their overall efficiency.

Brokers face more data-related challenges

Across multiple questions, brokers revealed they have more challenges with data and process complexity than any other subsector.

For example, more than 50% of broker respondents said that process complexity is their greatest operational challenge, while a third reported that data sourcing and ingestion is too labour intensive at their organisation.

Almost half of brokers are increasing their automation budgets for 2023 to address these issues.

To find out more about AutoRek’s research findings, click here.