Insurance still lags in digital transformation – study…Why data can be a fundamental source of value in insurance

Insurance still lags in digital transformation – study

By Insurance24

HARARE, Businesses are struggling to make progress with their digital transformation process – and insurance is playing catch-up with other industries, according to a new report.

New research from global consulting firm Capgemini has found that only a minority of businesses feel they have the digital and leadership capabilities to make digital transformation a success. Just 39% of businesses felt they had the digital capabilities necessary, and only 35% thought they had the requisite leadership capabilities.

Even with those unimpressive numbers, the insurance sector is lagging behind other industries, according to Capgemini. The insurance industry is behind the telecom, automotive and banking industries in both digital and leadership mastery, and at 56% had the highest percentage of beginners in digital mastery.

The report surveyed more than 1,300 business leaders across more than 750 organizations. It compared digital transformation progress against a similar report from 2012.

“The new research shows that despite huge investments in digital transformation initiatives, set to exceed $2 trillion by 2021, organizations today feel less equipped with the right capabilities than they were six years ago,” Capgemini said. In 2012, 45% of organizations surveyed felt equipped to handle digital transformation; that number has since dropped to 35%. Less than 40% of organizations felt they had the right digital capabilities to advance their transformations.

Businesses have made headway on customer experience in the digital realm, with 43% using mobile channels to sell products and services today, compared to just 23% in 2012. But only 36% of businesses surveyed said that they excelled in digital operations capabilities.

“For example, only 38% of organizations say that their employees can collaborate digitally with other employees and just 33% of organizations agree that digital technologies improve communication between senior executives and employees,” Capgemini said.

Why data can be a fundamental source of value in insurance

By Insurance24

HARARE, Data is gold dust in today’s insurance industry. In recent years, artificial intelligence (AI), machine learning and big data analytics tools have cast the industry into a haze of gold, delivering exponential business value through data insights.

However, the term ‘haze of gold’ is quite apt in the case of many insurers. Lots of organizations have huge amounts of data at their fingertips but not many have the ability to see through the haze with clarity around how to turn that data into value, and how to do so in a compliant fashion.

Mayer Brown attorneys Dan Masur, Brad Peterson, and Donald Moon recently co-authored a chapter on “DOs and DON’Ts for Big Data Analytics” in Mayer Brown’s new handbook, Technology Transactions: Thriving in an Age of Digital Transformation. The attorneys list nine key considerations for firms in order to best leverage the power of data analytics.

“At Mayer Brown, we view data as a fundamental source of value,” said Peterson, partner in Mayer Brown’s Chicago office, and leader in the firm’s Technology Transactions practice. “We’re starting to get clients coming to us identifying data as their most valuable asset, but expressing concerns about how disorganized, inaccessible and potentially non-compliant their data is.”

The question is: How can insurance firms successfully capitalize on big data without landing themselves in damaging lawsuits? Compliance and contractual obligations are key.

“Big data can sometimes be scary and of course it comes with challenges,” commented Masur, partner in Mayer Brown’s Washington, DC, office and leader in the firm’s Technology Transactions practice. “In the past, insurers have traditionally spent relatively little time focused on the terms in which they’re obtaining data.

“New guidelines and pressures around compliance and the protection of personal information requires insurance companies to focus much more attention on their terms and conditions around how they collect data and whether they have sufficient rights to use it for the purposes they intend to.”

Compliance requires hard work and a lot of due diligence, especially in today’s ever-consolidating insurance industry. Mergers and acquisitions (M&A) are hot right now, with insurance firms eyeing ‘banding together’ as an effective solution to thwart industry disruption. But, as companies join via M&A and collate their data into one massive pool, the haze of gold can become even more opaque.

“The data challenges that come with M&A have been a bane of the insurance industry for many years,” Peterson told Insurance Business. “Consolidation means taking on different policy or insurance management systems, which are unlikely to have compatible data. Combining two systems together often results in answers that aren’t quite right, and when you then apply data analytics to the aggregated data, the insights could create regulatory problems.

“We recommend insurance companies to be M&A ready. By that we mean building systems that are widely compatible, keeping data clean and organized, and making sure they have rights to access the data on their systems. Acquirers doing their due diligence will require firms to prove their data compliance and show that data is formatted in a way the acquirer can easily take on.”