’There are many challenges which firms have faced and will continue to face,’ says chief executive
Insurance firms are shifting their strategic priorities to focus on operational resilience, according to a new report from software firm AutoRek.
Released yesterday (11 April 2023), the Insurance industry outlook 2023: strategic priorities, operations, technology and financial controls report examined current trends and issues facing the insurance industry.
Some 500 insurance professionals working in insurance firms in the UK and US were surveyed at the end of 2022 as part of the report.
It revealed that 26% of respondents have focused on customer experience, acquisition and retention and back and middle office optimisation over the last two years.
However, over the next two years, the report said firms were planning to reduce efforts in these areas in favour of ensuring overall operational resilience.
It found 38% of firms pointed to process complexity as a material operational challenge, with around eight in 10 planning to streamline their operations over the next two years as a result.
Additionally, the survey found that 75% of insurance organisations acknowledged that legacy technology had a negative impact on their operations.
In the previous two years, firms have mainly focused their tech investments on finance and accounting, largely driven by regulatory requirements such as Solvency II and IFRS 17.
However, this is not set to continue, with tech budgets for 2023 and 2024 favouring accounts receivables and operations automation, according to the report.
Gordon McHarg, chief executive at AutoRek, said: “As the report sets out, there are many challenges which firms have faced and will continue to face over the coming years, both from an external market perspective and competing business-as-usual processes perspective.
“How well prepared firms are to meet the challenges discussed throughout this report will define their success over the months and years to come.”
‘Competing demands’
Meanwhile, the report said that US insurance firms have more agile back-office systems than their UK counterparts and were more active in reviewing their back-office systems, with 30% saying they do so at least every six months.
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This was compared to only 20% of UK firms – the report said, however, that the overarching trend was that they view updating back-office technology to be a significant resource burden.
Piers Williams, Insurance Lead at AutoRek, added: “Picking the right overarching strategic objectives is far from a simple task, particularly with insurance businesses balancing multiple competing demands.
“The back-office is really the engine that drives any financial organisation and efficiency gaps in this area are detrimental to the bottom line and ultimately customer facing activity.”
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