Technology crippling traditional insurers
Legacy IT issues are seeing long-established insurers lose their competitive advantage to new players in the insurance space, a global snapshot suggests.
Technology acts as the prime inhibitor of business transformation, with just 28 per cent of insurers saying their IT systems are aligned with their overall strategy, according to the State Street and Economist Intelligence Unit (EIU) Platforms for Growth report.
More worryingly, most insurers (86 per cent) have been crippled by legacy IT issues, which often require hundreds of millions of dollars to address, the report says.
"Insurers can't just shut down the business and stop everything they are doing while they are putting technologies in place. That is a huge hurdle to modernisation," the report said.
As a result of their inability to transform, traditional insurers are struggling to keep up with new market entrants who have the most up-to-date data systems in place at the onset, it said.
"To access new client segments and counteract new tech and data-driven competitors, it will become increasingly important for insurers to focus on collecting and analysing data to understand consumer behaviours and deliver tailored products that match those needs," Pete Thurmond, State Street North America's head of insurance sector solutions, said.
The report is based on surveys with more than 300 insurers, from the Asia-Pacific, Americas, Europe, Middle East and Africa.
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