Response base: 250 senior insurance executives
Source: Economist Impact Survey 2022
Long way to go
- Better decision-making processes. The omnipresence of electronic devices and the prevalence of digital transactions mean data has never been more plentiful to insurers. Leaders have been making significant strides in leveraging it to stay engaged with customers and use behavioral insights for rating, passing stringent regulatory tests to deploy as part of innovative products. Most, however, still lack a comprehensive strategy to make use of abundant data; less than a third of insurers leverage data to guide decision-making processes.
- Product development. The modern insurance company can develop and launch new products, from a technology perspective, in multiple markets in weeks, while laggards still require 12 or even 18 months to deploy new products.
The importance of bridging the gap
- Risk is accelerating. Insurers need to have the processes and technical capabilities, including filing/regulatory engagement to make use of available data to rate new risks. Emerging regulatory limitations on using traditional rating factors, such as rules to avoid data bias, are accelerating the need for these capabilities.
- The customer journey is changing fast. Traditionally, insurance buyers used brokers to select and purchase policies. Then, there was the assumption that a direct-to-consumer relationship would prevail. In today’s world of abundant data and mature e-commerce, this model is giving way to a new ecosystem that requires insurers to do things differently. With the growth of ecosystems, the linear way of thinking is giving way to a continuum on which research and pricing may be started and completed online or may involve more traditional intermediaries along the way to advise on decisions.
- Costs must be reduced. The modern insurance company begins with processes that assume zero-touch and builds exceptions with a hybrid of human and AI-powered support that can deliver a personalized policy.
Economist Impact research commissioned by Cognizant demonstrates an insurance industry amidst evolutionary change. While insurers will continue to face myriad choices in deciding the next step toward the future, winners will keep experience and data as their North Star to inform the choices they make.
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The views and opinions expressed in this report are those of Cognizant and do not necessarily reflect the view and policies of Economist Impact. Data presented is from an Economist Impact executive survey, commissioned by Cognizant, conducted in early 2022.
This article was written by Tim Queen, Head of Consulting in Cognizant’s Insurance practice and Eduardo Plastino, Director in Cognizant Research.