More than 70pc of insurance CEOs globally see technology, specifically data and analytics, as key to the future of their industry and helping them stave off more nimble and aggressive fintech rivals.
PwC’s 19th Annual Global Survey of 1,400 CEOs has found that a new generation of analytics is enabling insurers to anticipate what will happen, including shaping outcomes such as reduced accident rates.
Worrying to the CEOs is the reality that technology is also enabling customers to benchmark insurers against their competitors and many of the new competitive benchmarks are being set by fintech entrants who are applying digital insights to understand consumers better.
From a CIO perspective, 70pc of global insurers are still planning cost-cutting initiatives in the year ahead.
‘Insurance CEOs are facing enormous challenges from digitally-enabled new entrants, to engaging with their customers in new and interesting ways’
– RONAN MULLIGAN, PWC
An overwhelming majority (79pc) cite data and analytics and 76pc cite relationship management systems as providing the greatest potential contribution to improving engagement with customers.
According to PwC, a new generation of analytics is enabling insurers to anticipate what will happen (predictive analytics) and also to shape outcomes such as reduced accident rates or improved health and well-being (prescriptive analytics).
Data will be the main weapon in the fight between incumbents and more nimble fintech start-ups
But technology is also creating new benchmarks for customer experience, response and cost and making it easier for customers to judge and compare insurers against their competitors.
Hampered by slow and unwieldy legacy systems and traditional ways of working, insurance CEOs admit they are struggling.
Nearly 70pc of CEOs in the insurance business see the speed of technological change as a threat to growth and are concerned about changes in consumer behaviour.
Data and analytics are enabling some insurers to reinvent themselves altogether, from protecting against risk to managing and monetising information.
But it is the far more nimble new and emerging fintech players who are the greatest cause for concern, with digital insights being used to sharpen their understanding of consumers and undercut incumbent competitors.
“Insurance CEOs are facing enormous challenges from digitally-enabled new entrants, to engaging with their customers in new and interesting ways, to redressing under-investment in technology and systems,” said the director of PwC’s insurance practice in Ireland, Ronan Mulligan.
“Remarkably, though, their No 1 headache remains over-regulation. If insurers are to meet the real business challenges of delivering profitability in a changing market then regulation needs to come down the priority list.
“CEOs and regulators will need to find a way to deliver the necessary level of regulation and oversight at an acceptable cost to the business model. If they can’t, then their responsiveness to the changing needs of the customer will be slower.”
Digital workplace image via Shutterstock
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