Monte Carlo 2014: Industry is at a digital inflection point, KPMG study finds
The insurance industry is struggling to develop operating models to cope with the new digital world, according to a new report from accounting firm KPMG.
The report, titled ‘Transforming Insurance’, is based on interviews with insurance leaders globally and covers the industry’s priorities and progress in adapting to the digital world.
KPMG global head of insurance Gary Reader said: “Our research shows that the industry recognises the imperative of reinventing operating models to respond to and capitalise on digital technologies.
“But it also shows that insurers are struggling to develop digital strategies that align with their business objectives and to resolve legacy infrastructure and business processes.”
He added: “Digital advances, the rise of social networks and the ‘internet of things’ are having a transformational impact on the volume, variety and velocity of data coming at our organisations, adding further complexity.”
Report author and KPMG insurance innovation and high growth markets lead Mary Trussell said: “The insurance industry is at an inflection point. To date, insurers have largely embraced digital capability as a supplement to existing customer service channels.
“Our survey shows a massive 108% increase in the number of respondents who want to use digital technology to enter new markets in the next three years as compared with the previous three years. That reflects growing digital ambition but significantly raises the stakes.
“Yet around the world we still see many insurers and intermediaries focused on product and channel silos, facing significant challenges from legacy systems rather than unlocking value for customers and investors. This suggests the need for more than digital transformation. Such a transformation represents a massive cultural change.”
In addition to the 108% rise in those who want to use digital technology to enter new Market’s KPMG’s survey also found a 43% increase in respondents who plan to use digital means to deliver new products and services.
But 65% of respondents said the regulatory environment does not yet support product and channel innovation.
The survey found a 69% increase in the number of respondents who plan to use digital means to optimise their supply chain.
But although more than two thirds of respondents say their digital strategy goes beyond their website, only one third say their digital initiatives are aligned with their company’s strategic objectives.
Thirty-one percent of respondents said the leading challenge with data analytics is capturing reliable data and 35% cited legacy systems as the underpinning issue.
But more than half of respondents identified human barriers to implementing a data and analytics strategy rather than technical constraints.