Two-thirds of European insurance executives plan to accelerate their digitalization programs to improve both customer satisfaction and operational efficiency as the recession continues to loom.
This emerges from a new market study published today by the market research and consulting company Information Services Group (ISG).
For the Study A total of 270 business decision-makers and IT managers from the European insurance industry were surveyed in the fourth quarter of 2023. It showed that two thirds of those surveyed are planning to increase their investments in digital technologies in the next two years. The areas of payment channels (68 percent), cybersecurity (63 percent), augmented/virtual reality (63 percent) and artificial intelligence (59 percent) top the list of the most important investment areas.
From the perspective of those surveyed, the biggest business challenges currently lie in acquiring new customers (85 percent) and retaining existing customers (74 percent). Increased investments in digital offerings and personalized services should help maintain and gradually expand the current customer base.
“European insurers are focusing on digital-first approaches as they introduce next-generation technologies that increase core business profitability and improve companies’ market position,” said Steve Hall, Chief AI Officer & President ISG EMEA. “Automation of processes and decisions and data management will help create technology-enabled organizations that put people at the heart and use rapidly evolving digital technologies to reshape work, reduce costs and improve services improve. AI will undoubtedly be a further driver of this development.”
According to the survey, the area of artificial intelligence (AI) is currently growing particularly rapidly. Thirteen percent of those surveyed say that their annual budget for AI is already more than one million euros. Six out of ten experts expect a further increase in investment funds in the current year. In addition to established AI methods such as natural language processing and machine learning, large language models are also increasingly being used.
For many respondents, AI development is still in its early stages: half of the companies (50 percent) are experimenting with prototypes, only 6 percent are developing company-wide AI solutions. The comparative value for the area of augmented reality (AR) and virtual reality (VR) technologies is 18 percent. The high level of popularity is mainly due to the business customer sector. Here, AR/VR tools open up new opportunities to minimize damage through preventive maintenance.
91 percent of those surveyed see increasing efficiency in the area of customer data management as an important investment priority. From consulting projects, ISG knows that only about a fifth of existing customer data is used effectively. Breaking down data silos remains a major challenge.
Another area of focus is cybersecurity, as companies increasingly rely on digital infrastructures that make assets vulnerable to business interruptions and cyberattacks. Against this background, investments in digital risk management continue to increase. The areas of cyber and AI in particular benefit from this. The aim is to build “customer trust” as an important differentiator and to meet increasing regulatory requirements. 63 percent of respondents expect cybersecurity budgets to increase in 2024 and 2025 to meet growing risks and regulatory requirements.
“The focus of insurers’ investments is on AI, legacy modernization and IT security. “Building strategic partnerships can improve access to digital skills, process knowledge and specialized talent, while expanding market access and sharing development risk,” adds Hall. “The proportion of companies that view consolidating their service provider portfolio as a top IT priority is increasing significantly from 59 percent in 2022 to a remarkable 93 percent in 2023.”
Given the evolving labor market dynamics and the need to attract and retain IT talent, a balance between insourcing and outsourcing is crucial: the proportion of respondents who want to invest in insourcing (78 percent) is almost as high such as the proportion of those who want to invest in outsourcing (77 percent). 68 percent of decision makers see improving talent management as an urgent business imperative.
“While technology companies and insurtech startups are becoming attractive employers for young, technology-savvy professionals, established insurers are faced with the challenge of attracting and retaining the best talent,” concludes Hall. “High-quality talent management becomes a crucial factor in meeting transformative technological requirements.”
www.isg-one.com
2024-02-08 01:51:58
#Europes #insurers #increasing #investments #digitalization
