Five priorities for insurance businesses wanting to reap rewards amid digital transformation

Stocks and Financial Services Press Releases Thursday June 20, 2019 16:00
กรุงเทพฯ--20 มิ.ย.--PwC Thailand

Imagining customer expectations with new insurance models, focussing on talent development, and strategic collaborations with agile management are keys to marking out the front-runners, according to 'Insurance trends 2019', part of PwC's 22nd CEO Survey trend series.

The insurance industry has been one of the most disrupted sectors. The rapid change in emerging technology has shifted not only the insurance business model but also consumer behaviour. Many insurance companies saw this as a threat. However, the majority of the 140 insurance industry leaders who took part in the Annual Global CEO Survey believed that the initial concerns regarding digital transformation are now turning into optimism.

According to the survey results, the speed of technological change and other disruptive developments are insurance leaders' top concerns. The actions in response to those concerns include investing in new technologies, focussing on improving customer experience and developing new business models. For example, more than 80% of insurance CEOs revealed that they deployed AI as a part of their business model or would be within the next three years.

Another innovation is the increasing use of Internet of Things (IoT) technology to decrease property claims and regulate crop damage risk, for example, by organising integrated real-time data from ground sensors, aerial surveillance and satellite imagery.

'Insurance trends 2019' identifies five vital priorities for expediting business transformation and reaping rewards during this digital era. Each of them is distinctive but their interdependencies should be recognised and addressed to ensure effectiveness.

1. Reimagine your business – The key to standing out is determining what your business does better than competitors. This may increase cost and time commitments in the short-term, but you need to pay enough attention to innovations for risk prevention and customer experience. This will smoothen the digital transformation for the future.

2. Choose the ecosystem you want to serve – You need to determine how you will engage with your target ecosystem. For example, with whom you might need to partner? Who is the best option for open platform functionality, data sharing, and understanding of business costs? You'll need to figure out how to build customer and partner loyalty.

3. Simplify legacy systems to drive efficiency and create capacity for growth – Technology transformation should simplify the existing business models and create the fully modernised capabilities. You'll want to move customers to the new platforms once they are trialled and refined.

4. Focus on talent development – It's important to pay close attention to how tasks, such as claims handling and settlement, will change. How can your staff make the most of their freed-up capacity? And how can you harness technology to support this?

5. Accelerate execution – Execution and change management need to become core competencies. The industry is ripe for change and the companies out in front are in a position to take advantage of an increasingly open and connected landscape.

Stephen O'Hearn, Global Insurance Leader, Partner, PwC Germany, said that insurance CEOs around the world are more positive about their outlook. They are increasingly enhancing digital capabilities, and implementing the right digital technologies strategies.

"Everywhere I go, I see an insurance industry buzzing with new ideas, emerging opportunities and confidence about the future.

"Previously, innovations was often stuck in trial process and far to practically reached clients. Today, with advancement, they have shifted innovations into the heart of their businesses, introducing new products and services to market more quickly while at the same time challenging conventional ideas about insurance business models.

"However, accelerating transformation in an organisation is not an easy task. Therefore, the five priorities can be a practical guideline for insurers who want to embed new technologies front and centre. Those who do will be the leaders in an era of persistent changing customer needs and demands for even more dynamic digital products and services," Stephen said.

On 12 and 13 June, PwC Thailand hosted PwC's Global Insurance Leadership Meeting 2019 in Bangkok. It provided a great opportunity for PwC insurance territory leaders, cluster leaders, service line leaders, and subject matter experts to update each other on the trends, markets and issues affecting the insurance sector.

Stephen, who was in Bangkok to attend this two-day meeting, said: "We have various discussions about hot topics in the insurance market right now and found that customer-centricity has long been a prominent buzzword in the insurance industry. However, understanding what it means and delivering on its promise have been easier said than done.

"Presently, consumers want choice, flexibility, simplicity, and personalisation in what they purchase, the channels they use, and how they interact with insurers. Both the volume and precision of customer intelligence is evolving to make this possible. Aided by InsurTechs and advances in digital technology, insurers are putting customers' needs and experience at the centre of a new generation of innovation," he added.

According to the report, many of the insurers out in front are located in Asia, where the young generation is open to digital transactions, especially through mobile phones. The speed of development in much of Asia is less burdened by regulations and outdated legacy systems. Other facilitators include simple and spontaneous forms of distribution, supported by online retail giants.

Anothai Leekitwattana, Partner and Insurance Leader at PwC Thailand, said that in Asia, digital distribution and technology providers have played a role in bridging the gap between supply and demand. Tailored insurance products and services, together with the lack of really dominant players in the insurance sector created a huge opportunity for insurers. Tech giants are using digital platforms as a driving force to generate massive growth in the insurance sector in China. Their innovations led to the development of new insurance products.

"Specifically in Thailand, insurance operators realise that they have to embrace changes and be agile in a rapidly changing business environment like today," Anothai said.
"As we have seen – technology has play a necessary role in the industry as more consumers purchase insurance online or via applications. This encourages digitalisation in Thailand's insurance market.

"Similar to other insurance businesses in the region, Thai insurers are starting to use digital technology to sell their products. However, the pressure for transformation is mounting. It's now the time for insurers to adapt their businesses, focusing on speed, agility and execution. They need to create new business models, choose the right ecosystem, simplify systems and create a new capacity for growth by building a talent pipeline. Accelerated execution is needed to secure rewards in this new era in insurance," she concluded.

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