Is IT investment paying off in your insurance business?

March 17, 2023
7:59 pm

Joy Olaivar

Insurers with targeted IT investments achieve better growth and performance

Insurance companies that invest more in technology outperform rivals who don’t seek focused investments in business metrics including GWP growth, shareholder return, and expense and loss ratio.

Four areas for targeted IT investment

So what kinds of technology investments can help insurers achieve growth and improve productivity and performance? Investments in four areas are critical:

Marketing and sales

It is possible to improve the efficiency of basic customer-facing processes like policy inquiries and policy applications. Marketing technology solutions can help improve consumers’ experiences in general.

Over a three- to five-year period, IT investments in this industry might result in top-line growth of up to 20–40% for P&C insurers and 10–25% for life insurers.

Underwriting and pricing

Automatic fraud detection during underwriting can increase the possibility that insurers will correctly detect fraud and determine rates. Profit margins are further increased by a pricing toolkit that compares prices across competitors and allows for a flexible, segmented market as opposed to technical pricing. The profit margins of insurers using these and other product, pricing, and underwriting technologies have increased by 10-15% in P&C insurance and 3-5% in life insurance.

Policy serving

In policy servicing and inside IT, workflow automation, artificial intelligence-based decision support, and user experience technologies can enhance the client self-service experience and automate back-office activities, resulting in lower IT and operations costs. Modern self-servicing solutions will also shorten processing times and even enhance client satisfaction. Insurers that use these and other product, pricing, and underwriting technology have witnessed increases in their profit margins of 5–10% in P&C insurance and 10-15% in life insurance, according to an examination of large-scale insurance IT modernization efforts.

Claims

P&C insurers can segment more complex cases and greatly increase claim accuracy by using automated case processing, which uses machine learning technology that has been trained to handle simple claims scenarios. These technologies can assist P&C insurers in increasing profit margins from extensive IT modernization efforts by 25–40% when combined with greater partner integration and steering technology integrated in a transformation of the claims operational model.