Investing in technological upgrades would benefit insurance companies financially and help them maintain a strategic advantage, according to a new report by A.M. Best.
The industry appears to concur with these findings, with the report revealing planned upgrades to legacy underwriting and claims systems, business processing systems, and website functionality, are underway at nearly every company A.M. Best rates.
The report, ‘Insurers—Behind the Technology Curve, and They Know It’, noted that customer experience, legacy administrative and claims services, data aggregation and mining, and underwriting were the four primary areas considered in need of most technological improvement.
According to the report, the insurance industry has long collected data but has yet to tap into the full potential of it.
Associate director of industry research and analysis at A.M. Best, Jack Hopper suggests an approach that combines this data with insurtech companies’ wealth of innovative and enhancive analytics processes data could be effective.
Hopper said: “Insurtech companies will find deploying these capabilities difficult as they lack scale, while insurers may lack the depth about the power of computing and machine-learning techniques.”
He continued: “Still, the combination of the two could be powerful and may lead to an inflection point that could change the typical insurance model.”
Sridhar Manyem, director of industry research and analysis at A.M. Best, explained that technology must flow throughout a company culture and cannot just be relegated to IT departments by CEOs.
Manyem said: “They need to have an in-depth understanding of technological concepts and how they relate to specific business operations and strategy, given the potential for industry disruption.”
He added: “If done properly, technological improvements and increased automation can increase efficiency and offer better insights.”
