Getting the most from insurtech: from strategy to execution

PwC’s 24th Annual CEO Survey shows that two-thirds (64 percent) of global insurance chief executive officers are planning to significantly increase their investment in digital transformation over the next three years. This is essential for overcoming some of the biggest challenges facing insurance businesses including dealing with a patchwork of siloed legacy systems, taking on new entrants and handling new ways of working. The winners are going to be those that are digitised, fast and responsive.

When insurance companies start exploring insurtech, they often zoom in on the tech first, looking for new systems to revolutionise procedures such as claims processing. Leaders look beyond features and functionality. These are the key components that take an insurtech plan from strategy to execution:

• Have a coherent strategy
• The importance of cultural fit
• Choose business models that work
• Manage innovation

How to drive value from data

Shifting systems to the cloud will make data accessible across an organisation, enabling teams to measure productivity, assess new opportunities and judge the most profitable lines of business with greater speed, accuracy and insight.

Looking ahead, richer streams of data could come together with new innovations in areas such as wearable technology and equipment sensors to create always-on customer engagement, pay-as-you-use cover and proactive risk prevention. This will help address one of the sector’s main concerns, as 77 percent of insurance CEOs told us they were concerned about keeping up with changing consumer behaviours.

Data is central to keeping insurance businesses viable while maintaining an appropriate risk profile. For example, shifts in extreme weather relating to climate change will mean that policies written, and investments made, will need to be evaluated using the best data possible. The international Task Force on Climate-related Financial Disclosures (TCFD) has created recommendations on how these factors should be incorporated into company reports.

Smart organisations will take these on board and use data-driven decision-making across their businesses as standard to create sustainable change that drives growth.

Risks and opportunities

PwC’s CEO Survey found that cybersecurity is the top concern for insurance CEOs: 66 percent said they are “extremely concerned” about cyber threats, putting it above pandemics and health crises (55 percent) on their risk register. Furthermore, PwC’s Global Digital Insights Trust Survey 2022 finds more than 50 percent of organisations expect a surge in reportable incidents next year above 2021 levels. Crime, particularly cyber crime, sits top of the risks considered by insurers for the first time in the global edition of PwC’s 2021 Insurance Banana Skins Survey.

Cybersecurity needs to be a fundamental consideration in transformation plans and strategic business decisions. Key to this is simplifying organisational structures and IT systems so they are easier to secure—something that transformation can help to address.

As well as building operational resilience, a secure digital transformation will help build trust with customers and regulators. An organisation that is digitised, nimble and transparent can adapt faster to evolving regulatory requirements, such as IFRS 17, while reassuring customers their data is being used and protected in an ethical manner.

The current opportunities that insurers have to transform promise long-term benefits. New technology offers the chance to do business better and faster and with more insight than previously possible. It also allows for better relationships with customers and more personalised services and products. Changing ways of working can cut costs and make better use of the skills of the workforce, as well as provide new opportunities to innovate.

Insurers have a unique responsibility to influence behaviour and help accelerate ESG outcomes. The industry protects people and businesses when they suffer a loss. It provides stability in the economy as a long-term investor. Insurance also funds infrastructure development through investment. With new tools, new digital capabilities, new ways of working and a more communicative data-driven approach, it can create sustainable change that offers greater transparency, which benefits everyone.

© 2021 PricewaterhouseCoopers Ltd. All rights reserved. PwC refers to the Bermuda member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 156 countries with more than 295,000 people who are committed to delivering quality in Assurance, Advisory and Tax & Legal services. Find out more and tell us what matters to you by visiting us at www.pwc.com. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

Liz Batten is digital solutions director of PwC Bermuda. She can be contacted at: elizabeth.batten@pwc.com