Every year, CGI meets in-person with clients across the globe to get a pulse on their top trends and priorities to understand their challenges and opportunities, especially as the urgency to become digital organizations continues to accelerate across industries. This year, we conducted in-person interviews with more than 1,300 client executives across 17 countries, including insurance business and IT executives.
Insights from this year’s insurance interviews, demonstrate that the sector has made significant strides, compared to previous years, in achieving digital maturity and adapting to the pace of change. In this two-part blog series, I’ll cover this year’s key findings, starting with the top industry trends impacting insurers. In part 2, we’ll take a look at key business and IT priorities insurers are pursuing in response to those trends.
There are a number of industry trends that are driving insurers to pick up their pace of change and embrace innovation, including digital technologies that transform their business models, ways of working and customer relationships. These trends include:
- Responding to fast-shifting consumer product and digital servicing expectations (92%)
- Managing costs to maintain/ improve combined operating ratio (73%)
- Meeting and optimizing regulatory compliance (70%)
- Extending the industry value chain (69%)
- Managing the growing impact of emerging technologies, such as dynamic pricing, the Internet of Things and blockchain (54%)
- Addressing the increasing number and variety of cyber attacks (53%)
In response to these trends, insurers are investing in enterprise transformation roadmaps, innovation hubs and new partnerships to drive change across their operations, including product development, underwriting and claims management. Fifty percent of the insurance executives we interviewed have put in place a digital strategy across their enterprise, with a particular focus on their internal operations. Forty-one percent have extended their enterprise digital strategy to include ecosystem partners.
Change approaches, budgets and progress
In our interviews, we asked executives what approaches they’re using to drive an enterprise transformation roadmap. The majority are using separate digital teams (66%) or integrating digital initiatives within their existing lines of business (66%). Most of the others are adopting new forms of collaboration, including agile (56%) or partnering with external providers (55%). A lesser number are relying on grassroots innovation (34%).
In terms of budget allocation, to date, insurers have cautiously invested in change, but are now more confident in making future investments. All of the clients we interviewed are significantly increasing their investment budgets for the next year in key areas such as digital transformation, technology and infrastructure change, system and process optimization, product and service innovation and data analytics.
As insurers invest in new transformation approaches and initiatives, our 2017 findings shows a dramatic pickup in their digital maturity and pace of change. Based on last year’s results, insurers fell last among the 10 industries surveyed in terms of their digital maturity and pace of change. This year, they fell behind only retail, banking and communications—each known for their extremely fast pace of change.
Our research shows a clear cohort of insurance leaders that are spearheading much of the change taking place in the industry. These leaders are investing in digital transformation and embracing innovation to help differentiate themselves and win customers. This is putting pressure on the margins of those insurers that are slow to respond to the increasing urgency to digitalize.
However, change is never easy and some of the key transformation challenges identified includes: 1) managing cultural change (75%), 2) balancing the demand for speed with legacy constraints (75%), 3) deriving insights from customers and in-house data (45%), and 4) financing the cost of change (40%).
What specific business and IT initiatives are insurers pursuing to drive their enterprise transformation successfully? In my next blog, we’ll cover the key priorities. In the meantime, feel free to reach out to me if you’d like more information on these findings.
About this author
Vice-President, UK Financial Services
As Vice-President, UK Financial Services, Paul helps drive the development of CGI’s UK insurance strategy and helps clients accelerate their digital transformation by supporting the development of their overarching digital vision and execution strategies.