The Future of Insurance: Beat the Competition with Technology
The insurance industry is changing rapidly. The shifting market and resulting challenges in the industry have a lot of companies scrambling for answers to their problems – is yours one of them?
The answer can be described in one word – analytics. But before looking to the answer, let’s discuss exactly what the current challenges are in the insurance industry.
The digital transformation in insurance is fundamentally changing the way insurance carriers do business, adding complexity to an already complex environment. New competition from technologically savvy companies in digital and online spaces is a constant concern. These non-traditional sources are creating increased price sensitivity and are accelerating the push toward digitization. In order to stay competitive, traditional insurers need to find a way to know their market, know their customers, and reach those customers in a digital way. If traditional companies can keep up in the digital sphere, they can outpace the upstart competition.
In addition to reaching customers, changes are occurring in the revenue side of the business. Investment incomes are decreasing, and are no longer the steady revenue drivers that they once were. With greater insight into other potential sources of revenue, insurers can offset this change in the market. That insight can come from improved analytics.
As a result of the new market drivers in the industry, there are new challenges facing insurers.
As sources of revenue for the insurance industry change, the role of the CFO changes as well. The CFO has to become more of a business partner to the other business units. This partnership involves becoming a source of more information and insight, and advising based on that information. With an ever-increasing amount of data from which to pull information and insight, the CFO needs to improve analytics to support this changing role.
New regulatory and legal requirements, such as Solvency II and IFRS, are also adding complexity to the job of the CFO. In order to ensure compliance, improved and innovative processes need to be put in place, and many companies are turning to the CFO to take the lead. Add to that increased pressure to improve capital and liquidity positions, and the need for insight in order for a CFO to operate is now higher than ever before.
Meeting the challenges with SAP solutions
Now back to the answer – analytics. It goes without saying that insurance companies have massive amounts of data. But most companies are not using that data effectively. And even if they have analytics in place, it usually takes time – and several people and departments – to get answers to even the most basic questions.