Rapid advances in technology have made the insurance industry ripe for disruption. Price and value comparison websites, mobile transactions, cyber risk insurance, and other digital applications have the potential to fundamentally change general insurance in the next few years. To remain competitive, established insurance companies must embrace digital transformation grounded in foundational principles of increased speed to market, improved operating efficiency, and IT consolidation.
The insurance industry is challenged by reducing margins and an increasingly competitive global business environment.
Within retail insurance, price wars between insurance aggregators and comparison shopping sites reduce profitability in an already crowded marketplace.
Insurance technology startups, similar to FinTech, are also attempting to disrupt retail insurance models with new digital offerings.
And increased global regulatory requirements add cost and complexity to an already challenging market environment burdened by low GDP growth and overcapacity.
The major challenge confronting the insurance industry is disintermediation by aggregators and third parties with more user-friendly, personalized digital storefronts.
Insurance companies need to build better digital channel applications that are increasingly personalised and data-driven. By building their own high quality digital experiences, insurance companies will keep the customer relationship, rather than being dis-intermediated by aggregators and third parties.
Another challenge is the inability of insurers to access and use data stored in mainframes or data warehouses for risk management and personalization of a policy. Legacy environments based on mainframes and private data centers also present a challenge to digital innovation and transformation.
And of course information security is critical to protecting against regulatory and reputational damage.
Digital and agile for us are about two things: being faster, but also more customer-centric by developing apps that really matter for the customer."
Head of Digital Factory, Allianz