How insurers have to embrace digital transformation to achieve resilience and success

Juliane Welz
Director, Insurance Transformation, PwC Switzerland

To retain or increase their market share, insurance companies need to build a clear and holistic digital strategy for the future. Those who can rapidly innovate and adapt will thrive in the digital world. Insurers must be strategic, agile and driven to succeed.

To generate growth and innovation, insurers must expand their digital investments beyond legacy modernisation and digitisation efforts to creating novel value for customers though unique products, solutions, partnerships and engagement models. To fully embrace the digital future, insurers must leverage digital technologies, data and ethical AI.

While some digital capabilities have been around for nearly two decades, the insurance sector has only started to meaningfully adopt them over the past few years. Some of the most recent disruptions to the industry include fully digital administration and contracting of insurances, intelligent recognition and processing of insurance claims as well as AI-supported detection of fraudulent claims. Yet, even though large legacy insurers acknowledge the importance of digital transformation, they have been rather slow to make changes at scale. As a result, their hesitancy has given rise to a relatively large number of small but innovative start-ups. There have been three key developments in the insurance sector evaluated by PwC: digital transformation, AI & data analytics and a digital workforce.

The shift in the insurance budget

The focus is shifting towards a more comprehensive digitalisation of customer interactions, which includes a broader range of services beyond just sales and claims. Over the next three years, insurers plan to decrease their investments in “established applications” technology, including self-service platforms, data services and RPA. Instead, insurers are currently prioritising cloud computing, the Internet of Things, AI and data analytics. These “next big things” are expected to receive more than twice the level of investment compared to the past.

Swiss insurance companies

Even though Swiss insurance companies are steadily progressing towards digital transformation, there remains untapped potential in fully embracing digital technologies. Significant strides have been made in the areas around AI and data analytics. AI has evolved from being a futuristic concept to a practical tool for many insurance companies by enhancing customer services and streamlining claims processing. Examples of the Swiss market adoption include an AI-driven claims estimator, AI models to detect fraudulent claims and improved chatbot technology. Furthermore, data analytics has become an indispensable tool in the insurance sector, providing valuable insights from large amounts of data. Combined with customer-centricity, data analytics allows insurers to understand their clients and anticipate future trends, empowering them to modify their risk models where required. Swiss insurers use data analytics to stay ahead of industry changes, tailor services, enhance risk predictions, detect fraud and optimise core business operations.

Successful digital transformation

According to our research, insurers face significant hurdles when it comes to their digital transformation efforts, such as people-related challenges, a complex legacy IT infrastructure and operations which have traditionally been siloed. A fresh approach to digital is therefore needed to create a competitive advantage that can be sustained. Only by fully committing the organisation as a whole can insurers achieve a successful transformation. Starting with an overarching vision and a clear roadmap towards this common goal, defining and regularly reassessing the relevant technology as well as a transparent change management and workforce planning system are the three crucial pillars for transforming the organisation.

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