It has been found that global insurers increasingly regard investment in digitalisation as a priority, with 49% expecting to acquire new technologies through mergers and acquisitions (M&A) over the next three years.
That is according to the findings from a Willis Towers Watson (WLTW) survey, released yesterday, which also reveal that 74% of insurers worldwide believe their sector has not shown leadership in digital innovation.
The expected M&A activity is thought to be due to many insurers being unfamiliar with emerging technology, with previous WLTW research showing that 58% of senior-level executives in the insurance industry believe they are behind other financial services in implementing digital technologies.
Their Asia Pacific digital solutions head, Nicholas Chen, said: “Insurers recognise the importance of building a sustainable digital infrastructure to improve customer engagement and as an essential distribution channel.
“The tools emerging are often so far removed from insurers’ previous experience that external innovation models are likely to be the only way of expanding digital capabilities. This is expected to lead to a wave of new M&A activity in the years to come.”
“Insurers that hesitate could very well get left behind and fail to capture future generations of younger policyholders, who are more likely to engage via digital channels.”
The WLTW survey was in conjunction with Mergermarket, and involved questioning 200 senior-level executives within the insurance industry to map the changing attitudes towards digital technologies.
It was found that 94% expect distribution to be the area where the technology will have the greatest impact over the next five years, with 77% saying web and mobile delivery channels will provide the biggest change.
They also anticipate big data, automation, robo-advice, and sensors to emerge in importance, however Chen warns that adopting strategies to suit different markets will be crucial.
“In Asia, having a deep understanding of the customer and the market is key. A single solution and strategy may not work across all markets,” he said.
“For instance in China, Chinese consumers are very comfortable transacting on mobile devices hence having a strong mobile offering that leverages leading local platforms including WeChat is expected, along with fulfillment capabilities.
“How an incumbent engages, differentiates, and grows through digital channels in a market such as China is also more complex.
“On the contrary, in Indonesia where there is a large unbanked population, and intermittent wireless connectivity, the digital offering will look very different.
“As a result, we stress the importance of insurers having a clear digital vision and strategy at the regional and local level.”
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