Insuranceciooutlook

Top 10 View-points CIOs must know Before Embracing Technologies

By Insurance CIO Outlook | Friday, October 11, 2019

The insurance industry sees a wide range of benefits offered by technological advancements by substantially investing in digital transformation programs. But there are a few challenges that creep in and see how CIOs are solving them.       

FERMONT, CA: Sources say that around eighty-five percent of insurance CIOs are on top of their agenda for digitalization. Worldwide insurance providers are embarking on digital models and ecosystems, but there are certain obstacles to digital transformation, which need to be efficiently addressed. The insurance industry has always been a pioneer as far as innovation is concerned, and CIOs focus on digitizing the operational systems coping with the market and business evolution trends. Insurers need to offer products and services efficiently and reinvent themselves in terms of business models, document processes value propositions, and customer relationships through major revisions. Here is a list of challenges faced by the industry and solutions to overcome them.

Beyond Modernization of Core Systems

The challenge for CIOs is to consider how insurers companies can adapt to the growing volumes of data. Insurance needs more than just the core system modernization. CIOs expect a positive electronic, analytical, and organizational transformation that will allow them to access the full potential generated by a core transformation. A thorough analysis, inspection, and a comparative study of the existing and new business models and operational algorithms helps CIOs list out difficulties and find solutions.   

Lack of Alignment between IT and Business

While most executives agree that the company is clear about the concept of digital transformation, the lack of agreement with what actually constitutes digital transformation is an obstacle to success. This transformational demand comes at a time when IT budgets have remained relatively stable. Most insurance companies experience the negative effect of disconnecting the IT position from the business strategy, which in turn increases the risk of information fragmentation, safety, and regulation, and reduces accountability and consistency. Through breaking down the silo mindset, IT collaboration with business functions helps to support the business strategy. It facilitates a seamless flow of data throughout the company.

Content Chaos

All data comes from multiple sources, varying in volume, size, format, and type. In addition, content is duplicated through a shared drive, network directories, CRM, ERP, and other software for the enterprise. That's what we call anarchy of content. The explosion of consumer touchpoints, apps, and online channels makes providing the right information to the right people, whenever and wherever they need it, more difficult than ever.

To insurers, data is critical, ranging from regular insurance policy questioners through the insurer's contact center, website or agent to requests to consumer adjustment or claims processing, the capacity of insurers to facilitate such communications depends on how well they handle, identify, and distribute different types of digital information. CIOs can bring in efficient data handling mechanisms by wisely curating and investing in analytical software.

Lack of Integrations

This is the greatest digital transformation challenge. Driven by developments like cloud, today, the number of applications is massive. Large organizations use more than 1000 individual applications across their enterprise, so flexibility in the integration of applications is necessary for growth in the changing market.

Personalized Policy Coverage 

A key strategic priority is the need to improve the accuracy of risk measurement and provide customer-specific coverage. Customers are increasingly frustrated with conventional premium price models, and dissatisfaction is added by the disparity in premiums among plan renewals and new customers based on average risk analysis rather than a personalized evaluation. Today, telematics in cars have started to provide a more personalized risk profile in the motor insurance market, but this has been gradual and has not yet been applied across other insurance products. Nevertheless, this opportunity will only grow in the future as more and more customers look for customized policies that reflect their lifestyle, preferences, and digital/technology footprint – the implementation of real-time pricing and risk models.

Competition

Insurtech has greatly changed the insurance business. The benefits of data analytics and new technologies such as GPS car tracking and activity monitoring with wearables have influenced insurance greatly. Given the downturn in the industry's start-up operation, insurtech nevertheless continues to push the industry's future. The most significant challenge facing traditional insurers is to map their experience with new ways to connect customers, policyholders, agents, and partners. It is important for CIOs to join hands with insurtech players in order to stay ahead in the world of competition.

Connected Digital Ecosystem

Through plugging other companies into the current ecosystem, many insurers are widening their businesses and service offerings with increasing competition. Insurers face a critical need to connect the ecosystem's various components and provide consumers, brokers, agents, and partners with a seamless experience. In this light, CIOs should look for all-round enterprise collaboration and networking aids, which can serve the present needs and solve the existing challenges.

Omni-channel Engagement 

The Cornerstone for insurance companies is to make it easier for insurance agents to access all relevant data at any time, by combining multiple platforms to provide consistent customer experience, but this is more than simply implementing an integrated program. The omni-channel consumer commitment would allow insurers to offer the improved and more efficient service across all channels with a' single view' of the customer. The emphasis is on mapping a policy's lifecycle–by understanding the needs of a consumer–through to tailoring goods accordingly. Nonetheless, there are significant barriers to the existing market and organizational structures and legacy systems of technology. Incorporating omni-channel systems into the back office processes help CIOs overcome such barriers.

Vendor Partnerships

Insurance companies are continually looking at ways to effectively and efficiently change their networks. For some organizations, fully digital transformation presents a cost-prohibition. As a consequence, insurance companies are looking to invest in fintech start-ups and are working together with existing IT providers to develop solutions tailored to their environment.

Changing customer expectations, emerging technologies, and new competitors are all challenges to existing companies' success. By rethinking strategies, CIOs can coherently cope with this change with the help of digital aids, while walking towards fruition eventually. 

Weekly Brief