Insurers need to do more to embrace digitisation

The potential value of digital technology is not being fully exploited by insurance companies, a new report by McKinsey & Company has claimed.

The report said insurance firms around the world were using technology to improve decision-making, enhance relations with clients and develop more cost-effective business models. It added, however, that the true potential of such innovations has barely been touched.

The Making of a Digital Insurer: The Path to Enhanced Profitability report urged insurers to do more to embrace these digital developments.

“To reap the full benefits of the digital era, insurers should aspire to become digital firms,” the report advises. “Digital firms leverage technologies such as mobile, social and cloud to make better decisions, automate processes, deepen their connection with customers, employees and intermediaries, and pursue profitable innovation, all at a rapid development pace.”

The report added: “Those companies that can meet this challenge will build greater customer loyalty, cut costs and improve profitability.”

McKinsey’s research found that nine out of ten insurance carriers admit they are, however, finding it difficult to implement the innovative technology required to support digitisation. The report recommends that insurers embrace a high-speed agile IT model which is centred on customer engagement systems.