Insurance industry facing ‘digital envy endemic’

Insurers have revealed that they see themselves lagging behind the competition when it comes to digitalisation.

That was according to Davies and Clearwater Analytics, which claimed in a study that there was a ”digital envy endemic” happening within the industry.

Published yesterday (28 November 2023), the study revealed that large and small firms were concerned about their progress on the digital front, with less than a quarter of all survey participants considering their organisation advanced in their journey.

This is because they felt that inadequate infrastructure, lack of scalability and supportability was holding them back.

Firms also cited operational challenges in middle office, regulatory reporting and risk and performance as standing between them and true digital readiness.

Tina Wilkinson, consulting division partner at Davies, said: “Our report is painting a picture of insurers of all shapes and sizes focused on digital transformation but paranoid about their progress relative to peers.

”While digital native firms have the advantage in launching new services and onboarding new asset classes, they can’t compete with more established players when it comes to deep data assets.

”The party that solves their problems first will win the race, either newer entrants earning greater market share or traditional firms joining-up their capabilities.”

Data

For the study, Davies and Clearwater Analytics surveyed 40 c-level and heads of insurance respondents in operational decision-making roles across a range of European insurers. 

It also revealed that another issue for insurers of all sizes is data, which is driving the need for development of more digitally automated operating models.

”While all firms struggle with bespoke and ad-hoc reporting, the greatest level of manual intervention (80%) was reported by larger firms,” the study said.

“More established companies also reported bigger issues than their smaller peers with process duplication across multiple systems and internal bottlenecks.”

To overcome the identified barriers to digital transformation, many insurers are looking to managed services, so their in-house teams can focus on value-add activities related to product innovation and business development.

“Digital transformation is critical to supporting streamlined, automated operations and providing the scalability and flexibility required for the quantum level of growth the industry should be striving for,” Wilkinson said.