Nearly 4 in 10 insurance executives (37 percent) spend little or no time addressing legacy information technology issues. As a result, the legacy systems remain a “major implement” to the digital transformation of their IT capabilities.
This is a key finding of a new report from State Street, “Platforms for Growth: Technology Innovations in the Insurance Industry.” Conducted by the Economist Intelligence Unit on behalf of State Street, the global survey of 321 senior executives at insurance companies (including 34 percent from the Americas) examines the technology challenges facing the industry.
Nearly 4 in 10 of the survey respondents (39 percent) identify the targeting of new customer segments in existing markets as their top strategic priority. This compares with fewer than 1 in 7 who flag as strategic priorities:
- enhancing product offerings (14 percent),
- strengthening their distribution model (13 percent),
- entering new geographic markets (10 percent); and
- optimizing investment portfolio returns (8 percent).
When asked about factors that will be a “major driver” of technology investments, nearly 8 in 10 respondents (78 percent) list “changing customer demands.” Most of the executives also point to growth in business volume (75 percent), actions of competitors (64 percent) and new regulations (64 percent).
Turning to technology that might enable a greater understanding of customer customers and innovative product development, nearly 6 in 10 respondents (59 percent) intend to prioritize investments in customer relationship management (CRM) systems within the next three years. Majorities of the executives also plan to invest in social media tools to build stronger customer engagements (59 percent) and technologies to capture new customer insights (50 percent).
Among respondents who plan to expand existing investments, more than half plan to implement tools offering real-time access to investment data on emerging markets (53 percent), alternatives vehicles (21 percent) and exchange-traded funds or ETFs (21 percent), the report states.
Fewer than 3 in 10 of the executives (28 percent) believe their technology strategy and top strategic business priority are totally aligned. The report observes a greater alignment of technology and top business objectives among insurers’ asset management units (41 percent).
When asked about the pace of innovation across the insurance industry, the answers break down as follows:
- Rapid (31 percent)
- Moderate (46 percent)
- Sluggish (7 percent)
- Don’t know (16 percent)