The insurance industry has high digital ambitions but is failing to take action and embrace the digital world due to a lack of investment and strategy.
Even the easy “quick wins” in technology are being overlooked by players, according to Ernst & Young survey Insurance in a digital world: The time is now.
The survey found 80% of insurers globally do not see themselves as digital leaders, believing instead that they “only play the digital game” or are still learning to use digital capabilities. The survey also found that 81% of insurers believe that they could lose competitive advantage if they fail to embrace digital, and 74% feel it may affect their ability to innovate.
“The Australian market is in many ways similar to the rest of the world,” EY partner Andrew Taggart told Insurance Business. “It is well developed digitally for some categories such as direct motor but there are many other products that are way behind in terms of digitisation, and moving from traditional digitalisation to more holistic approach.”
Sixty-eight percent of respondents globally spend less than 10% of their business and IT development budget on digital. Yet despite this, insurance companies have significant short-term ambitions when it comes to digital, with 57% of survey respondents saying they intend to have a regularly updated digital business case and 78% aiming to have an organisational structure that supports their digital strategy within the next three years.
Survey respondents cite the lack of a single cohesive digital strategy business case (47%) and appropriate operating models to deliver digital capabilities (57%) as major challenges. Legacy technology is also hindering the process, with 80% of insurers globally citing legacy technology constraints as a major impediment to growth. Respondents also cite intermediary and agent channel strength or resistance among the top three inhibitors in implementing a digital strategy.
“As a general trend, the industry has struggled to get the necessary cohesion of strategy and purpose. They are not committed to the marketing and investment to develop it because of a lack of cohesion on digital strategy. There is a gap between ambition and commitment.”
The survey also found that just 1% of insurers currently offer online rewards, discounts, apps or “live” website assistance – although 27% expect to provide these benefits in the future, and only 43% of insurers are currently providing mobile quotes, compared to 72% who provide these online.
Taggart said there were a number of “quick wins” the industry can adopt to get into the digital game but few had taken the opportunity such as turning one’s traditional online capabilities into one that can be accessed on a mobile device; and piloting data and analytics programmes such as telematics which will enable insurers to better tailor products to their customers.
He added: “What really need to see now is […] concrete commitment and strategies with investment backing.”