Insurance companies are moving rapidly to embrace digital change, according to a recent report titled “Insurers’ 2016 Strategic Initiatives: Advancing Industry Transformation.” Insurance digital change is upon us.
Highlights of the report, drawn from interviews with U.S. insurance executives, are as follows:
- Improvements in the customer experience, data analytics, and product development remain a leading insurance industry priority for 2016, with a majority (75 percent or more) of U.S. insurers reporting strategic initiatives in these areas.
- Almost 50 percent of insurers consider their firms to be in a transformative period, which is the highest percentage reported since 2000.
- Insurers that are slow to adopt digital technology are at risk of either being acquired or falling into the bottom rung of industry performers.
The top five drivers for increased technology investments across all insurers and in order of priority, according to the survey, are as follows:
- Business optimization and transformation
- Business growth in current lines, markets and geographic regions
- Agent expectations and expanding channels
- Customer expectations
- Customer service
Survey results are based on responses from 116 North American insurance business and technology executives in the Property & Casualty (P&C) and Life & Annuity (L&A) lines. The survey was conducted by an advisory firm named Strategy Meets Action (SMA).
In related research on technology spending trends in the insurance industry, SMA reports:
- Technology budgets are growing by 7 percent annually at insurance companies that are following a path of strategic digital initiatives. Insurers that plan to stick with more traditional ways of conducting business expect to maintain or even decrease tech spending.
- Technology security, including protection against cyber threats, continues to be a priority for life and annuity insurers, as well as P&C personal lines and commercial lines insurers.
- Data analytics projects, also referred to as “big data,” are leading growth areas within technology spending. Data warehousing and predictive analytics are frequently reported projects among insurer initiatives.
Insurers are looking at data analytics in two primary ways. The first is in regard to underwriting and pricing, and the second use relates to customer-oriented marketing promotions and customer service.
About The Author
Bill Hager is an insurance and reinsurance expert and arbitrator. He is President of Insurance Metrics Corp. and also an elected member of the Florida House of Representatives, where he serves on the Insurance and other committees.
Mr. Hager is a former Insurance Commissioner for the State of Iowa, and former President of NCCI, Inc., the nation’s largest workers’ compensation rate corporation.
As a regulator for eight years in five positions ((i) Assistant Attorney General assigned to the Department of Insurance, (ii) First Deputy Commissioner of Insurance, (iii) Iowa Commissioner of Insurance, (iv) Administrative Law Judge, and (v) Executive and Member of the National Association of Insurance Commissioners), Mr. Hager, along with his staff, approved (or disapproved) of the language of most all insurance policies used by each of the 1,500 insurance companies doing business in the state.
This regulatory action also included the approval of policy application forms.
In all of the general statements here, see the state law of the controlling jurisdiction. Every case is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.
This blog is provided for educational purposes only. It is not intended to provide legal advice or an opinion in regard to any topic discussed. The blog should not be used as a substitute for legal advice from a licensed attorney in your state.