Digital transformation now features highly on the business agendas of most insurers, yet our latest survey reveals that more than two thirds of life insurers rate the adoption of digital technologies in the sector as moderately or significantly behind their financial services peers.
The global study surveyed 200 senior-level insurance executives from across life, health and property and casualty (P&C) to map the changing attitude of insurers to digital technologies and to examine the extent to which companies are using M&A strategies to realise their digital ambitions.
Figure 1 How would you characterise the level of adoption of digital technologies in the insurance sector compared to other financial service sectors?
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The research suggests that while complex regulations play a part in the slow adaption of technology in the sector, a deeper and possibly more disturbing reason may actually be at fault – fear. Notably, the fear of failure or the fear of being first to market.
Despite this concern, insurers do accept that they need to build their digital function (whether through internally driven innovation projects or more external initiatives, including joint ventures and M&A activity) in order to capture future generations and younger policyholders who are more likely to engage via digital distribution.
Almost half of all respondents (42%) have now appointed a dedicated Chief Digital Officer (CDO), however, for life insures this falls to just 32% suggesting the sub-sector is further behind in embracing digitalisation than those in P&C where 48% said they have a CDO in place and health, where the number rises to 60%.
In terms of achieving digital transformation, the research shows there is no one-size-fits-all strategy with insurers citing a number of potential routes forward. Organic growth is one as insurers are investing increasing sums in internal innovation and R&D designed to deliver digital transformation. However, M&A and strategic partnerships are likely to play a greater role as time is of the essence and competition is fierce.
While the window of opportunity for digitalisation in insurance is now wide open, it will not remain so forever. With new entrants from non-financial services backgrounds beginning to circle – insurers cannot afford to remain in the slow lane when it comes to adopting digital technology.
Download the full report New horizons: how diverse growth strategies can advance digitalisation in the insurance industry to find out:
- the major barriers to digital adoption in the insurance industry
- where insurers see the biggest holes in their digital capabilities and how they’re planning to fill them
- the industry’s view on potential digital disruptors
- the technologies expected to have the biggest impact on the insurance sector
- why M&A is vital to the path to digitalisation.