Tuesday 7 May 2019, Sydney, Australia. Australian insurers are finally embracing digital change and paving the way for a new digital future, says the latest Insurance Industry Report, released today by Experteq, an Australian-owned and operated technology services provider for the financial services industry.
The report found that Insurers have made significant progress towards embracing disruptive digitalisation by focusing more on the customer and by building an underlying innovation framework. For a quarter of the leaders interviewed, customer experience (CX) is the number one business priority in 2019 and beyond, followed by AI and Big Data (12 per cent) and differentiated products and services (12per cent).
Leaders said that they will measure their success in the year ahead mainly through customer-related performance metrics including customer satisfaction and customer retention, further indicating a strong and growing commitment to customers.
Alongside customers, innovation is high on the 2019 agenda, with 90 per cent of leaders stating it as their most important business capability for remaining relevant and competitive in the year ahead. This is vastly different to the previous Experteq Insurance Industry Report which found that 1 in 2 industry leaders were concerned about the impact of innovative disruption. Leaders were also concerned about how to innovate to remain competitive.
There is a much sunnier outlook now as Insurers show signs that they’re focused on the ‘how’ and have made steps towards this with 18 per cent of leaders building an innovation framework through investing in more innovative and strategic partnerships and through building a culture of innovation (18 per cent).
Shane Baker, CEO of Experteq says, “It is very encouraging to see Australia’s insurance industry progress the way it has over the last 18 months with many Insurers embracing disruptive technology and innovation. Insurers are transforming into 21st century digital organisations. While it has not been easy or straight forward for Insurers, in many ways taking the first steps were the hardest. Australian incumbents have received a wake-up call and are paying attention.”
“This is great news for the consumer who will benefit from the strong customer focus that Insurers have. There is a shift from customer ‘service’ to customer ‘experience’ which means consumers can now more easily do business on their own terms. The sector has needed this shift for some time, and it’s great to see that happening”, he says.
Yet, while the sector is embracing digital change, the report found one of the biggest challenges facing the sector is the lackluster investment in technology. Only 18 per cent of respondents said they were investing in technology to meet industry challenges.
This was on par with the hesitation to invest in RegTech’s (18 per cent) which is not completely surprising given the nervousness around relatively new and untested technology and limited regulatory guidance on the appropriate use of AI in the sector.
The lack of investment in technology was highlighted in the 2017 report as well. It’s a challenge leaders will need to face head on in the coming years as the way forward will be with innovative technology and collaborative partnerships.
“The insurance industry is undergoing radical transformation and it will only keep growing from here. The industry will look vastly different in 5 years’ time – there will be more competition, new players will challenge incumbents and there will be greater awareness that not all insurers are the same. Ultimately, the customer will be the winner,” said Shane.
The Experteq Insurance Industry Report was first launched in 2017 and canvasses the views of Australia’s insurance leaders. The report aims to investigate the challenges and opportunities facing the sector and deliver these insights to the broader industry in an independent, comprehensive and compelling way. It draws on in-depth interviews held between October and December 2018, with leaders from a broad range of private and publicly listed companies. The report serves as an independent pulse-check of Australia’s insurance industry. Download the full report here.