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Why its time for insurers to invest in tech

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It’s hard to think of an industry that has not been affected by the digital revolution, with the insurance sector being no exception. Although insurers have had a hard time in the media for being slow to change, our research reveals they are fighting back and showing determination for investment.

More than three quarters of insurance firms are planning to invest in new technology in the next two years, with half investing in 2017. This shows insurers are beginning to recognise the industry’s development and how IT solutions can be used to strategically grow a business.

So, what is driving the industry to invest in new technology? We asked 150 IT decision makers across the insurance sector what the key drivers for investment were.

The results revealed the primary driver for investment is the need to improve agility (35 per cent); suggesting businesses are looking to become more flexible. Embracing agility can enable a business to adapt and respond to developments within the industry as they happen, freeing up the business from traditional plan driven methods which lock in projects.

For insurers, one of the benefits of agility is the ability to increase scalability which makes it easier for a business to manage sudden increases in traffic. For example, when it comes to the summer months there is often a rise in customers seeking last minute travel insurance. Such consumers look for the best deals and want it in an instant. Insurers need to ensure they are flexible enough to deal with the influx of visitors and provide a seamless experience for the customer without their site crashing. Failing to prepare could lead to customers choosing to go elsewhere, resulting in a major loss in revenue and a tarnished brand reputation.

Security is still a prominent and ongoing issue for the industry with 30 per cent saying it is key driver for investment. By definition, insurers hold vast amounts of sensitive information for many of their clients, which often makes them vulnerable to data breaches. If an insurance firm were to get hacked, a client’s personal information could end up in the public domain or even sold on the dark web. This would be detrimental to a business’s reputation and could result in a mass of clients leaving the firm or potentially business failure.

A further 28 per cent saw innovation as the main reason to invest. Investing in technology which maximises customer value could drive a competitive edge. The expectations of customers have evolved rapidly over the years with many customers wanting a personalised and instant communication method with businesses. In today’s digital age, customers expect a seamless experience when visiting a website. If they have a problem purchasing insurance they are likely to abandon the site and go elsewhere. By implementing a collaborative system which allows communication in real time, either by instant messaging or video calls, customers can not only receive instant assistance but also feel there is human interaction when purchasing something so necessary. Furthermore, utilising this method of communication results in a wealth of data becoming more accessible. This allows a business to build a customer profile which can be used to further improve contact by providing a personalised service. If businesses don’t react quick enough to customer experience, it could leave them further behind with an already damaged reputation.

The insurance industry has reached a tipping point and change is now crucial. With firms facing threats from global competition and new start-ups, it is time for the industry to utilise the technology available to drive a competitive edge. It is also essential to keep in mind, technology is evolving at an incredibly fast pace, so it is important insurers keep up to date and invest now before they are left further behind. By investing in these areas, insurers can strive for success and meet their full growth potential. Failing to do so will prove disastrous, as ignoring the benefits of investing in technology both internally and for customers will see insurers setting themselves up for business failure.

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