@istock.com.
The Covid-19 pandemic put significant pressure on the insurance industry due to a rising concern that insurers were not offering enough protection for people and businesses
There were discussions around whether business interruption was covered and questions around how people could protect themselves against unknown risks – physical health in case of illness and savings, pensions and incomes in the event of job loss.
Isabelle Santenac, Global Insurance Leader, Ernst & Young (EY) said: “Many insurers realise that they have to meet changing consumer expectations in terms of the types of protection consumers are looking for, the way they purchase and consume insurance, but also in terms of the value they increasingly put on sustainability and responsibility.
“We clearly see the influence of sustainability on the investment side of the insurance business, driven by insurers’ commitments to support the transition to a zero-carbon industry.”
Digital transformation has been a key topic for the insurance industry over the past several years. However, progress has been limited to date.
The impact of the Covid-19 pandemic has been significant as the sector realised that it must accelerate on this front. One obvious area is around distribution.
Santenac explains: “When you live in a world where you can’t meet your clients or customers face to face, your selling capabilities have been seriously constrained. Therefore, the digitalisation of the distribution channel is critical.
“Some insurers also realised during the pandemic that their claims processes were still very manual. So, many insurers are now embarking on projects to digitalise claims management. Finally, the underwriting process was impacted by Covid-19 and many insurers are considering how to further automate their underwriting operations.
“From a technology perspective, the move to the cloud is a real enabler as it allows faster innovation and more scalability, while also containing costs.”
Cost optimisation is critical, as it can enable insurance companies to free up resources for re-investment in new digital platforms, data quality and so on. All these investments will drive further cost savings.
Santenac says: “The first area that many insurers have started to tackle in terms of cost optimisation is how to simplify and optimise their operating model so they can scale their business.
“The second aspect is around how to transform the cost base towards more variable costs. Insurers are reflecting on what functions and capabilities to keep internally, what to outsource to third parties, how to utilise the offshoring or nearshoring of their workforce, and how to use digital tools to increase process automation.
“A third and more strategic aspect of cost optimisation is to revisit their product portfolio and geographic footprint.”
Jochen Müller, EVP, MD Operations and Accounting Services, SimCorp, shares five considerations for insurers to accelerate their digital transformation
This is an executive summary of a longer report. In the full article, SimCorp’s EVP and MD for Operations and Accounting Services, Jochen Müller and EY’s Global Insurance Leader, Isabelle Santenac, uncover how sustainability is influencing insurers’ investment strategies, the drivers accelerating firms’ digital agendas, and the measures being taken to increase value to consumers.
