The Impact of COVID-19 on Insurance
The evergreen insurance technology revolution
The last six months have highlighted the strategic importance of technology, both in enabling new operating models and streamlining processes. But too many insurers still spend the majority of their IT budgets just keeping the lights on when far better solutions are out there – and this has got to change, says Duck Creek Technologies Managing Director for Europe Bart Patrick.
In many ways the pandemic crisis is proving a catalyst for change in our industry – from a cultural shift towards more flexible, home-based working that many would like to see continue at least in part in the future once lockdown restrictions are eased, to what has been a real wakeup call for many that their internal systems and processes must be resilient, flexible, and future-ready.
We conducted an independent survey of senior C-suite insurance experts and their IT division counterparts as we sought to hold a mirror up to reflect the impacts insurance businesses had seen internally due to remote working and the wider operational challenges presented by the pandemic, how they had adapted, and what lessons they wanted to take forward into the future.
Here are some of the key takeaways:
50% of IT / business support respondents felt their core systems were preventing their organisations from providing their employees with flexible remote working arrangements. However, overall, most respondents felt their core systems did not hinder them in this way.
5.3 Average Weighting (10= strongly agree, 1 = strongly disagree)
The majority of respondents agreed they spend the majority of their IT budget keeping the lights on, and trying to mend or enhance these IT systems was not going to solve future problems.
52% of all respondents said they were taking immediate steps to address IT weaknesses exposed by the pandemic, or that they’d seen some challenges and were now thinking more strategically.
71% of respondents wanted to see a flexible approach to work supported by technology continue into the future.
50% of both groups of respondents called for IT spend to be directed towards digitising the end-to-end insurance process.
Flexibility & customer experience ranked as the top priorities for insurers’ future strategies.
A daunting challenge
It’s clear that switching to remote implementations and digital processes has been easier for some insurance business than for others. However, maintaining business as usual, and achieving growth and launching new products in the current environment, may be daunting to some insurers whose systems are not set up to facilitate online negotiations and transactions.
In this new environment, the right architecture must be in place to support digitalising end-to-end insurance processes, a flexible approach to work, and a streamlined virtual customer experience.
The time has come to clear out the old pile of leaves and opt for evergreen technologies, rather than adding to insurers’ existing legacy technology pile with new bolt-ons and workarounds that will not solve long-term innovation and flexibility challenges, and will ultimately only add costs and inefficiencies.
End-to end digital services have been the norm in adjacent industries such as banking and ecommerce for over a decade, delivering enhanced client experiences and efficiencies and providing businesses with the kind of agility they need to adapt to future opportunities and operating models.
Many closed box, on-premises systems are essentially out of date as soon as they are installed, as procurement processes can last months if not years, leading to the situation of automatically working with less up-to-date systems – in other words, installing legacy from the get-go.
In contrast, cloud-based software as a service (SaaS) systems not only leverage the best available technology right at the point of adoption, but are also continuously delivering new functionality to solve the ever-changing insurance business challenges.
Our survey results were significant, and give us even more confidence that we’re heading down the right path. It’s an exciting prospect. We are creating something game-changing for insurers and throwing the heap of IT infrastructure they’ve been hamstrung by in the past out of the window. For good.