When it comes to digital transformation, many insurers aren’t seeing adequate financial rewards from their digital investments. Accenture’s Digital Performance Index assessed the level of digital investment and progress of 343 leading global companies across eight industries. The resulting data provides insight into how companies use digital technologies and channels to plan, make, sell and manage their business activities. The study also looked closely at the significant rewards the few industry high performers are realizing from their digital investments.
In Accenture’s Digital Performance Index, the sample was split into four quadrants: Digital High Performers, Digital Leaders, Business Leaders, and The Rest. There is a significant gap between Digital High Performers (only 5% of the group) and Digital Leaders. In the last three years, the global average investment per insurer was $45 million, yet Digital High Performers are seeing much higher returns on their investments compared to Digital Leaders.
Insurers are investing in digital technologies, such as the cloud, mobile, big data, robotics, and the Internet of Things, that are transforming their industries.
In Accenture’s sample, only 10% of insurance companies emerged as Digital Leaders, having made visible progress with their investments in digital.
Yet, these companies are not seeing the revenue growth and return on equity that Digital High Performers, such as Ping An and Progressive, are.
In fact, 75 percent of insurance companies are failing to build digital capabilities and reap financial rewards from their investments.
Large investments in quality technologies are happening, but why aren’t Digital Leaders realizing better returns? Are insurers being lured by bright, shiny objects?
A lack of focus on value generation when investing in digital presents a major risk for insurers. An attitude towards legacy systems and digital technologies doesn’t help either: “If it ain’t broke, don’t fix it”. Those who choose to embrace digital transformation, be strategic and measure the progress and success of digital investments have the potential to see significant gains—as much as a 100 percent increase in underwriting profits.
Many insurers recognize the need for digital transformation and are investing significantly in digital technologies. Insurers that get ahead and become Digital High Performers are focusing on digital investment strategies that provide a multiplier effect, allowing them to scale their efforts. Brokers of the future must ensure that digital investments are being reviewed and that strategies exist to gain returns and multiply value creation.