Customer growth and service is the No. 1 technology priority for insurance companies, according to a survey of 95 senior insurance executives by KPMG for the professional services firm's 2014 Insurance Industry Outlook report.
Twenty-seven percent of respondents pointed to customer initiatives as their top tech investment area, followed by 26% for data and predictive analytics, 24% for risk modeling and analysis, and 21% for IT infrastructure. This represents a major change from the 2013 version, in which a whopping 43% identified infrastructure as the top priority, beating second-place data and predictive analytics by 33%
"Though I think the insurance industry still has a way to go in terms of IT infrastructure, they're thinking, 'If I don't grow my business and find my niche through analytics, I wont be competitive in the future,'" says Laura Hay, National Leader of KPMG's Insurance practice.
In fact, it's likely that the focus on legacy replacement and updates over the past few years has raised the urgency to upgrade in other areas, Hay explains. A separate question related to the biggest issues within analytics strategy reveals changing attitudes among insurers.
"When you ask them, the No. 1 barrier is still the cost [of implementing analytics software and processes], but it's come down relative to last year. A couple years ago just the getting the data out of the systems and the data integrity was a large issue, but that's coming down as well. That's indicative of some of the infrastructure investments that have already occurred," Hay says.
More common stumbling blocks in implementing analytics at insurers include getting executive buy in and recruiting the best talent. Those shouldn't be discounted in an area that requires a culture change to embrace at its highest level.
"It's the cost combined with senior management buy-in that's a barrier," Hay says. "The reality is that to remain competitive they're going to have to nail it one way or the other. There's more creative solutions coming out from third parties that allow insurers to move quicker on this, and customers are going to push the industry to move faster than they normally move."
Ultimately, Hay says, insurers must be willing to take bold moves to succeed in the digital realm.
"The theme of our paper is 'Revolution, not evolution," but companies seem to be focusing on their core businesses as opposed to taking bigger revolutionary steps," she says. "As we look to an increasingly complex world enabled by digital and technology, what we see as the industry is poised for big change, but maybe not right now. We think the companies that make the bigger bolder moves will be rewarded."
Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio