Almost three-quarters of insurers believe the insurance sector has failed to show leadership in digital innovation due to regulations, reluctance, and cost, according to a January 2017 survey by Willis Towers Watson (WTW) with Mergermarket . The survey identifies where insurers see the biggest holes in their digital capabilities and reveals how they plan to close these gaps.
The respondents cited cost as one factor affecting the lack of meaningful progress toward digitization, with 32% blaming the length of time required to commercialize new technologies, and 24% citing the size of the initial investment required to make that transformation.
Insurers recognize that, after years of lagging behind their financial services cohorts, the time has come to focus M&A activities on investing in digitization. Almost half of these respondents (49%) indicated that they expect to make an acquisition over the next three years, with 14% of that sector indicating they expect to make multiple acquisitions, with 50% of insurers expected to acquire new technologies through M&A in the next three years.
Nearly all the respondents (94%) expect distribution to be the area where digital technologies have the greatest impact over the next five years, with strategic priorities in the areas of claims processing, loss adjustment, and customer management. Digital technologies identified as stand-out priorities for the next two years by 77% of respondents are web and mobile delivery channels, with big-data collection, automation, robo-advice and sensors being seen as priorities over the next five years.
At the same time, insurers also recognize the huge challenge and opportunity to leverage digitization for operational efficiencies that will lower costs and streamline processes to enhance customer experience.
The survey also highlights developing data and analytics tools as a key part of the innovation race for the insurance sector, with many insurers claiming to have already made substantial progress in this area. Nine in 10 (91%) have been exploring how to gather more information directly from their existing customers.
Meanwhile, 79% are using and leveraging social network data and more than half (53%) are looking at how to mine publicly-available data in new ways.
When it comes to digitally disrupting the industry, 45% of insurance companies believe they themselves will be the most likely to do so in the years ahead, while the same number tip start-up businesses to have the biggest impact. Just 8% see new entrants from the technology sector as likely to disrupt their marketplace.
Two hundred senior-level executives within the insurance industry took part in the survey (42% representing the life sector, 42% in the P&C sector and 16% in the health sector) and split equally across the Americas, Asia and EMEA regions.