According to recent research by Forrester, the primary business priorities for insurers by 2025 entail driving commercial growth, enhancing brand reputation, and ensuring strong regulatory compliance.
The report highlights the contemporary challenges faced by the insurance sector, which include sluggish growth, a declining customer experience, and technology-related issues. Insurers are increasingly looking towards artificial intelligence (AI) solutions to tackle these challenges, aiming to improve customer experience, streamline operations, and enhance risk assessment. One example noted in the report is how Progressive Insurance utilises AI to offer personalised rates based on a customer's driving behaviour. This reflects the transformative potential AI holds for the sector.
Forrester's research indicates that 77% of professionals in the insurance industry expect an increase in AI investment over the next year. Similarly, 73% anticipate heightened investment in data and information management, underlining a broad recognition of the value of these technologies.
Key insights from the report indicate a focus on three strategic priorities: commercial growth, brand development, and regulatory adherence. To stimulate revenue growth, 63% of insurance professionals are focused on acquiring new customers, 50% on retaining existing customers, and 42% on upselling or cross-selling products. These priorities highlight the importance placed on expanding market share and ensuring customer loyalty.
In terms of brand and reputation, 36% of the professionals surveyed emphasised the need to enhance trust in their organisation or brand. Additionally, 30% prioritised improving the digital brand experience, while 27% intended to increase investments in their brand and communications programs.
For regulatory compliance, the report reveals that 52% of professionals are aligning their organisational culture and values with compliance priorities. Moreover, 48% are focusing on investing in or expanding governance, risk, and compliance tech solutions, and 45% are looking to enhance information security technologies.
System modernisation is identified as crucial for mitigating inefficiencies and vulnerabilities within legacy systems. According to Forrester's findings, outdated systems pose challenges to the implementation of advanced technologies such as AI and data analytics. Modernising these systems will enhance IT capabilities, improve reliability, and allow for the adoption of industry clouds, ultimately benefiting stakeholders by providing a more robust and reliable infrastructure.
Talent development is another significant area of focus for insurance companies. According to the report, investing in employee training on emergent technologies, including telematics and AI, is essential for maintaining competitive advantage. This involves not only upskilling current employees but also acquiring new talent to enhance the organisational skill set. Ignoring this aspect can lead to operational inefficiencies and missed opportunities for innovation.
Indranil Bandyopadhyay, the Principal Analyst at Forrester and lead author of the report, stated, "AI and system modernization are not just buzzwords; they are essential for insurers to thrive in today's competitive landscape. By embracing these technologies, insurers can enhance customer experience, improve operational efficiency, and ensure compliance. Insurers that invest in AI and modernised systems will be better positioned to meet their strategic goals and drive growth."
