New barriers to global business could prompt insurers to push tech projects onto the backburners.

Multinational insurers are already counting the cost of rising barriers to international trade, investment, migration and the flow of data. Administration and compliance expenses at big insurance providers have swelled as these companies adjust to the growing number of restrictive trade and business laws around the world.

A further penalty, however, is often overlooked. Increasing trade and business restrictions are jeopardizing the growth of many big insurers. Global insurance providers are having to revise their business strategies to accommodate the fragmentation of digital resources and services caused by these new obstacles. Many new technology-driven projects may no longer be viable. The slew of local cyber-security regulations, employment laws and IT supplier requirements multinationals encounter, for example, could force such projects onto the back-burner.

Plenty of senior executives, as I mentioned in my previous blog post, are concerned about the impact of digital fragmentation. We asked them to identify where this phenomenon would most affect their digital transformation plans. Forty-five percent pointed to new digital business models. It was second only to customer analysis and tracking (see illustration).


Most vulnerable areads of digital transformation - chart research report

Digital fragmentation is likely to compromise the ability of multinational insurers, and other big corporations, to effectively use powerful digital technologies such as data analytics, cloud services and the Internet of Things. All these technologies rely on the rapid, unobstructed flow of data between people and devices.

Of the 400 CEOs and CTOs we canvassed, nearly 40 percent identified research and development together with innovation, among the business functions most vulnerable to digital fragmentation. A similar proportion pinpointed sales and marketing. The business function deemed most at risk was enterprise technology (42 percent).

The swing away from globalization towards more restrictive international trade and business barriers will not only hamper the current activities of multinational insurers. It also threatens their future. To overcome these obstacles, and thrive in the new global environment, insurers need to understand the full implications of digital fragmentation.

In my next blog post, I’ll discuss how digital fragmentation will affect the strategies and operations of multinational corporations. Until then, this link will give you plenty of useful information.

Digital Fragmentation: Adapt to succeed in a fragmented world.

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