The emergence of customer familiarization with digital technology has led to insurance carriers looking to make fast-moving dynamic changes in their strategies. The current ecosystem is constantly evolving and insurance firms must stimulate digital changes and enhance revenues, to alleviate the hindrances preventing their growth. Here are some challenges that all insurance players are bound to encounter at some stage:
The presence of “legacy technology” in the insurance industry is prevalent far more than in other sectors. Upscaling the core company system has been a long-drawn and costly challenge for most insurance companies. The juxtaposition with this condition is that companies cannot cease operational efficiency and product development until they have completed refurbishing the essence. You cannot lose the customers that are comfortable with the pre-established way of business, along with the essential archived data, i.e., claims and accounting. Establishing an integrated solution on a trial basis and then channeling that success into core systems can be the way forward. Thus, mastering this continuous transformation needs close and dedicated attention by a group of learned individuals.
With the onset of digital transformation, insurance providers need to circumvent relevant cyber-security issues. Several cyberattacks have targeted the company’s websites and systems with the intent to steal or manipulate user data. The CIA (Confidentiality, Integrity and Availability) model for cyber-security is a venerable and quality strategy to ensure component security. (1) However, dealing with security issues requires expert personnel and verified processes to deal with the possibility of a risk scenario. There is also a need to have expert cyber-security officers and the correct protocols to manage the development and testing of such systems.
In a global scenario where the pandemic has ravaged government resources and personal income, investments towards policy development have also suffered. Key company resources, namely investments in finance, time and personnel can be a few suggestions in this regard. . The providers need to creatively navigate through these barriers and free up resources for allocation to digital development. For example, time can be contributed by diverting it from other projects and personnel may need to be externally hired to obtain assistance. However, since there is an unwillingness to assign these resources, keeping development functioning is crucial. A focus on existing agendas as well as new priorities is imperative for a successful transition.
A large chunk of the challenge of operational innovation is the change in mindset it requires. The overhauling of this “attitude towards risk” is tough and involves creating new services and business models. Since these projected ideas are uncharted territory in terms of business, the process adaptation will require an array of variables. Close collaboration between developers, low-cost experimentation and model-driven development are a few of the important ideas for user acceptance. Operating in a standardized environment and providing sufficient training to employees can lead to mastery of such solutions. While providers should have a willingness to dedicate resources for testing, users must be ready to accept of the required digital technology.
To effectively manage these challenges, there is a need for setting the correct priorities and constant environment monitoring. Since digital advances will continue to prosper, major insurance players must adapt to these challenges as a legitimate way of furthering business. It is imperative to transform this digital initiative into a feasible reality through a carefully plotted system.