3 operational trends insurers must consider in 2023
“Operational excellence, not growth, is the driving force of a majority of insurance digitalisation initiatives in 2023” according to Gartner’s latest survey of insurance CIOs and technology executives.
The survey revealed that most insurers are seeking to reduce their large and costly infrastructure investments and are opting for cloud technologies. Many insurers who focused on increasing innovation said their digital technology investments exceeded value expectations and over 50% of insurers who focused on operational excellence indicated they also exceeded value expectations.
1. Cost optimisation
To maintain competitiveness, gaining more flexibility and reducing absolute costs should be prioritised. Insurers need to think about cost optimisation as a strategic initiative, to invoke large scale operational changes, new financial models and increase business growth sustainability.
Digital transformation can reduce the expenses associated with continuous maintenance of outdated, legacy systems and improve operations' efficiency and agility. It also frees up time enabling employees to concentrate on work that adds value, whether they are working in the office or remotely, by implementing modern cloud-based systems and procedures.
To learn more on cost optimisation read our article:
2. Increasing operating agility and resilience
The insurance industry has seen significant changes in how it and its customers operate in recent years. With global inflation rising dramatically, to around 8% in 2022 versus 4.7% in 2021, putting considerable pressure on insurance claims and rates in the coming quarters. The pressure on insurers to have a leaner cost base has risen due to these financial difficulties, which are linked to the post-COVID downturn, rises in inflation and the cost-of-living crisis and other current economic factors.
However, because the market environment has been fundamentally altered, previous cost-cutting strategies are now obsolete, and insurers need to get more strategic.
Digital transformation has the potential to increase the efficiency and agility of your insurance firms’ operations. We understand the importance of transformation, and specialise in migrating and modernising outdated legacy infrastructure using the best public cloud platforms that save our customers time and money – all while dramatically reducing their carbon emissions.
3. Revolutionise with AI, ML, and Automation
The most revolutionary technologies in the insurance sector today are robotic process automation, machine (and deep) learning, and artificial intelligence. In fact, automation can reduce the cost of a claims journey by as much as 30%. Digitising resource-heavy processes like claims processing, underwriting, customer communications, finance, and HR through intelligent automation (IA) and artificial intelligence (AI) frees time for employees to focus on more complex tasks.
Insurers can modernise their core systems with intelligent automation, alter digital interactions, get a complete picture of their consumers, and launch new services faster while spending less money on operations. The automation of processes increases customer satisfaction while reducing operating costs, and touches every step in the value chain regardless of the line of business or channel (McKinsey).
Read our latest whitepaper on Operational Excellence which explores some of the key operational challenges faced by today’s insurance sector and how they can be addressed through technology:
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