Globally, leading insurance companies are embracing the future and capitalising on technological advancement and innovation much faster than other industries. Concerns about technological change and other digital disruptive elements have eased amongst insurance companies and sentiment shows that insurers are ready to embrace the new wave of change. These are some of the findings from PwC’s 22nd Annual Global CEO survey, which interviewed 140 global insurers.
Victor Muguto, Long-term Insurance Leader for PwC Africa, says: “Until recently the insurance industry was one of the world’s most disrupted sectors. The pace of technological change and shifts in consumer behaviour led to a new wave of competition that many insurance companies found threatening.
“Yet, the responses from survey respondents show that initial apprehension over digital transformation is turning into optimism. According to the survey findings, concerns about technological change and other disruptive elements have eased considerably.”
The pace of change in the insurance industry has taken place more rapidly than originally anticipated and is expected to accelerate further. According to the survey results, the three aspects insurance CEOs are most concerned about are:
- the speed of technological change (31% which is down from 51% in 2018)
- changing consumer behaviour (21% which is down from 31% in 2018)
- new market entrants (10% which is down from 22% in 2018)
How are new insurance models changing the relationship with customers?
Initially most insurers have struggled to understand how to execute optimally on customer-centricity due to legacy systems and complex business processes. But this is changing over time.
Pieter Crafford, Financial Services Advisory Lead for PwC South Africa, says: “Consumers want flexibility, simplicity and personalisation in the products and solutions they are offered as well as choice in the channels through which they interact. Both the amount and precision of available customer intelligence are growing to make this possible. A key global development is how insurers are partnering with technology companies and platform providers to create new value propositions and better experiences for customers.”
However, challenges remain, with many insurers still overcoming their legacy challenges. As operations become more automated, ingrained human capabilities that cannot be replicated by machines are becoming an even greater differentiator.
More than 80% of insurance CEOs are extremely (36%) or somewhat concerned (45%) about the impact of skills shortages on their growth prospects. 50% of insurance CEOs say the skills gaps impacts the organisation’s ability to innovate, and almost half stated that it impacts their ability to sustain quality standards and/or the customer experience.
The survey looks at five essential priorities for insurance executives to consider to accelerate business transformation:
- Reimagine your business: Digital transformation is opening up opportunities for businesses to develop deeper relationships and insights. But it’s not a differentiator in itself. The key to standing out is for business leaders to determine what their business does better than any other.
- Choose the ecosystem you want to serve: As opportunities open up beyond insurance and business becomes both an orchestrator and a direct provider of products and services, it is important to judge what commercial ecosystem best plays to an insurer’s strengths and relationships.
- Simplify legacy systems to drive efficiency and create capacity for growth: The demands of transformation have to balance with the need to sustain existing business models and ‘keep the lights on’ using ageing legacy systems. However, insurers cannot rely on slow and unwieldy capabilities when cheaper and more efficient solutions enabled through aspects such as AI and Cloud are available
- Focus on talent development: Although much focus has been placed on the type of jobs that RPA and AIi will replace, it’s more likely that elements of jobs will be automated and augmented. It is therefore important for insurers to look at how tasks will change, how staff can make most of their freed-up capacity and how technology can be harnessed to support this.
- Accelerate execution: As the velocity and complexity of change increases, execution and change management need to become core competencies. Insurers need to revisit how change is designed, plans are created and budgets are made and implemented – moving away from old-style implementation marathons in favour of a series of agile sprints.
“The industry is ready for change and those that are embracing this are in a position to take advantage of an increasingly open and connected landscape”, Muguto comments.