Digital transformation will reshape the insurance industry over the next few years. While insurers will have to rethink everything from work processes to business models, the positive effects of digitization will be well worth the effort, according to a new study.
In just a few years, the insurance industry as we know it will be nearly unrecognizable. To succeed in the digital era, insurance organizations and their employees will have to adapt to the changing nature of business.
A recent study by Cognizant and Roubini Global Economics reveals that insurers are well aware that current norms and operating procedures won’t cut it in the digital economy. Two thirds of the 160 insurance executives surveyed believe digital transformation is key to their company’s commercial future.
“Artificial intelligence (AI) and big data will have a huge impact on insurance. As repetitive work becomes automated, employees will be forced to update their skills and add value that a machine cannot,” says Ben Pring, VP and director of Center for the Future of Work at Cognizant. “The need for employees who master and understand both business- and technology-related issues will increase significantly within the next couple of years.”
In this rapidly changing environment, insurance companies will become more specialized.
“It may be more strategic for a corporation to target a micro-vertical niche, rather than continuing to pursue large, undifferentiated marketplaces,” Pring points out.
While insurers face challenges such as data security issues, an unpredictable market and lack of digital talent, the overall effect of digitization will be hugely positive. The study predicts that in a three-year time span, the economic impact of digital transformation on the insurance industry will be USD 1.63 trillion.
Digital will also benefit the individual by offering personal career advancement, ways to collaborate better and become more efficient.
The study shows insurers understand and expect that technologies such as public cloud, digital currency and blockchain will become increasingly important. That makes the industry better prepared for the digital shift than most.
The next steps are to increase spending on digital initiatives, to upgrade the technology infrastructure and hire the right talent.
Download the report at thecognizant.com and learn more about how to prepare for the digital future