Other parts of this series:
Investors backing insurers want change programs to yield results quickly.
Insurers are coming under growing pressure from their shareholders to adapt to the digital disruption that’s sweeping their markets. What’s more, they’re expected to make changes that yield results quickly.
Eighty percent of the insurers canvased in our global Change Survey report that their shareholders expect their change programs to deliver targeted benefits within 18 months. This urgency is new. It’s far removed from the lengthy time-scales once used to measure returns on critical projects in the insurance industry.
Urgency, however, is one of the hallmarks of the digital economy. If organizations don’t move quickly, and correctly, they could struggle to remain competitive. It’s startling to think that nearly half of the companies on the Fortune 500 list in 2000 no longer exist. A staggering 75 percent of the companies that were on the Standard & Poor 500 index in 2012 will be replaced by 2027, according to US researcher Innosight.
Our research shows that insurers are already investing heavily in change programs.
We found that the forces driving insurers to change are both internal and external. The need to improve the delivery of products and services, reduce costs and tighten risk and regulatory compliance are among the top internal drivers cited by insurers. External factors include shifts in customer expectations, changes in technology and new legislation and regulations, as well as pressure from competitors.
Our research shows that insurers are already investing heavily in change programs. Investment priorities include improving efficiency and cost control, upgrading customer service and experience, and enhancing risk management and regulatory compliance (see diagram below).
Often these investment priorities are intertwined. Many insurers are looking to new digital technologies to implement required “Brilliant Basics” such as, to both improve the customer experience they provide and lower the cost of delivering products and services, . Far fewer are also aiming at “cutting new ground” to shape new expanded value proposition for their clients.
Big data analytics, mobile facilities, the Internet of Things and cloud computing are the digital technologies insurers believe are most important to their change programs. Recent innovations such as robotics and blockchain are attracting investment but lag more established digital technologies.
Insurers’ investments in change programs will be critical to their future and their ability to rotate to the New. Without significant changes to how they conduct their business, traditional carriers will struggle to compete with new digital insurance service providers that have fewer fixed assets and lower operating costs.
In my next blog post, I’ll discuss how some insurers are outperforming their competitors by becoming more nimble and responsive to the demands of the digital economy. Meanwhile, have a look at these links. I think you’ll find them useful.
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