According to financial services and research firm EY, 2015 will be a year in which the insurance industry makes a significant investment in digital technology. In a recent report titled 2015: Global Insurance Outlook, EY highlights that both the property-casualty and life-annuity insurance sectors should do well this year due to broadly improving global macroeconomic conditions.
Related to this, Shaun Crawford and the rest of the EY team anticipate that major global insurance firms will ramp up their IT spending in 2015. They note: “Key challenges in 2015 include rising competition, generally soft pricing conditions and tight profit margins. To effectively surmount these problems, many insurers are investing technological solutions that improve front-end sales, distribution and customer service, and enhance back-end operational efficiency and expense management.”
Global insurers: Technology to the rescue
Crawford and colleagues say that their the large majority of the respondents to their 2014 Global Insurance CFO Survey replied “technology” when asked what areas they planned to invest in this year. Insurers worldwide are investing in digital platforms to improve their relationships with customers in all product classifications. The process will empower both businesses and consumers to shop for insurance more easily, as well as make products more transparent, understandable and comparable.
Insurers across the globe are taking advantage of data analytics, cloud computing and new modeling software to improve their market segmentation strategies, minimize claims fraud, and fine-tune underwriting and risk management. New technology solutions will make it possible for these firms to optimize processes, increase collaboration internally and externally, and make it easier to demonstrate regulatory compliance.
One additional technology “spend trend” in 2015 for global insurers is cyber security. Given all of the hacking incidents in various industries over the last year or so, insurance execs are determined that they will not be the next industry taken down by hackers.
Statement from EY’s 2015 Global Insurance Outlook
The EY report says that now is the time for insurance firms to step up and invest in technology. “In 2015, the onus is on providers to integrate data analytics with customer experience, underwriting, market segmentation and acquisition, risk-based pricing, distribution strategy, claims optimization, liabilities valuation and reporting. More insurers need to consider the value of an omni-channel distribution platform to interact and transact digitally with brokers, agents and consumers; encourage self-service customer experiences; and achieve cross-selling opportunities.”