Tech and Adaptability with Covernet: Where Do We Go Now?
Technology adoption has been vital in the development of the insurance landscape. Artificial intelligence (AI) has been used to process policy reviews, renewal insights and client engagement workflows.
Underwriters using digital platforms such as Sixfold benefit from research processes becoming automated, ultimately turning days into hours. Machine learning has also become integral to the underwriting process as gathering more accurate data becomes less time-consuming.
Some technology even has the potential to completely change the landscape for digital-first insurance customers, such as embedded insurance.
Why can’t technology keep up with insurer demands?
Covernet research shows that technology for insurers is not adequate in the current digital climate. Insurers feel frustrated by the limit of technological capabilities, which prevent them from delivering their service to customers.
A recent report from Covernet highlights how 88% of insurers rated the digital platform adoption of technology for their business as important; however, only 61% of businesses describe technology as able to meet functional requirements. CCO of Covernet Jim Campbell says:
“The industry is caught between digital aspiration and operational reality. Insurers understand that technology is critical for competitive advantage, but too many are settling for platforms that don't fully deliver on their business requirements.
“This disconnect suggests many firms are rushing into digital transformation without properly evaluating whether their chosen solutions can actually support their strategic objectives.
The report also highlights that selecting the wrong platform for the job can lead to long-tail operational consequences and increase the risk of costly compromises.
To avoid these, there must be a dedicated search for the right system, which will balance distribution, pricing, underwriting, claims and finance. The top priority for firms should be investing in requirements, discovery, proofs-of-concept and change readiness, the report claims.
“The next phase of digital transformation is about ensuring the platforms insurers choose can genuinely transform their operations rather than simply digitising existing inefficiencies.
“Choosing a core platform is a difficult call and it deserves dedicated attention. If teams don’t fully invest in the process - and for most this isn’t a full-time role - it’s easy to miss what really matters to underwriting performance and customer experience.” adds Jim.
With 39% of respondents reporting neutral or poor satisfaction with their platform’s functionality, it becomes clear that understanding technology is vital in executing the right vision for each company.
“The industry is caught between digital aspiration and operational reality. Insurers understand that technology is critical for competitive advantage, but too many are settling for platforms that don't fully deliver on their business requirements.
The report also reveals how technology investment is approached by the insurance industry. For 39% of respondents, the appeal of digital transformation is driven by increased competitive advantage.
Covernet claims the number of insurers that now use digital platforms to some degree is 97%, highlighting an urgent need for insurance companies to prioritise digitalisation and reject hesitancy.
At what cost?
With AI at the forefront of the efficiency revolution, some risks do come with implementing the technology.
A recent report from McKinsey and Co. suggests that some issues will persist, relating to security, high costs, talent shortages, governance gaps, industry regulations, cultural resistance and the risk of getting locked in with suppliers.