File this under "damned if you do, damned if you don't." Insurance technology executives are used to being pulled in multiple, often competing directions regarding imperatives such as the deployment of resources, project prioritization, and compliance.
This tension has become particularly acute regarding two top-priority areas: optimizing digital channels and security. The challenge has to do with the need to balance the convenience and access promised by the online and mobile channels with the controls and protections required to shield valuable policyholder and corporate information from cyber-criminals and fraudsters.
Two recent Insurance & Technology articles, included In a recent digital issue, provide insights into the complexity of this challenge. As associate editor Kelly Sheridan reported, insurers are under pressure to accelerate their mobile strategies in order to improve the customer experience with this increasingly critical channel. Carriers are being exhorted to expand their mobile offerings with new features and transparency geared to boosting convenience and engagement.
Meanwhile, senior editor Nathan Golia analyzed how the proliferation of channels and e-business sites is driving new industry initiatives around password management, as insurers strive to do a more consistent and effective job of managing employee and customer access.
Of course, it's not a trade-off -- insurance companies have to excel at both customer engagement and data security. The fact that financial services companies, including insurers, are the preferred targets of cybercrime and fraud is without doubt a very costly problem -- not just in terms of financial costs, but also the costs of time, resources, and reputation.
As McKinsey Tucker Bailey, Andrea Del Miglio, and Wolf Richter write in a recent report on the rising strategic risks of cyber-attacks, "Only a few CEOs realize that the real cost of cybercrime stems from delayed or lost technological innovation -- problems resulting in part from how thoroughly companies are screening technology investments for their potential impact on the cyberrisk profile. ... We estimate that over the next five to seven years, $9 trillion to $21 trillion of economic-value creation, worldwide, depends on the robustness of the cyber-security environment."
As scary as this is, it's possible these trends also present some opportunities for insurers that make smart investments to reinforce security -- and by extension, channel performance. Such a strategy could rebuild trust and credibility with consumer and corporate customers and actually gain some advantages in the digital marketplace. It should be possible to have it both ways.