Insurance companies need to seize an opportunity to investment in transformative technology in 2014, according to a report by Ernst and Young (EY).
In a review of property and casualty insurance in the US, the advisory firm claimed that low interest rates had created an environment in which insurers should ‘double down’ on technology investments which can deliver a high return on investment.
The study said that an important catalyst for these investments was the need for insurers to shift focus from a product-centric model to a customer centric model.
“A rare opportunity exists to broadly transform technology, replacing core engines with fully integrated, cost-effective cloud-based systems for distribution, underwriting, product development and claims,” the report said. “Making such investments, companies can drive down frictional operating costs, increase access to data and information across organisational silos, and enhance speed to market to improve profitability in the increasingly price-competitive environment.”
EY claimed that insurers acknowledge that there is currently a low level of digital sophistication in the industry but a dire need for action to be taken. Its recent Insurance in a digital world survey found that 57% of insurers are making plans to transform their organisational structure to support digital strategies – with 78% anticipating this development within the next three years.