Improving the customer experience and operational excellence, not growth, is the driving force of a majority of insurance digitalisation initiatives in 2023, according to a new Gartner survey of insurance CIOs and technology executives.
The 2023 Gartner CIO and Technology Executive Survey gathered data from 2,203 CIO respondents, including 91 from the insurance industry, in 81 countries and all major industries, representing approximately $15 trillion in revenue/public-sector budgets and $322 billion in IT spending.
Kimberly Harris-Ferrante, Distinguished VP Analyst at Gartner, says, "Improving the customer experience (CX) ranked higher in the survey this year than more strategic focuses, such as growing revenue or new products/services development to support transformation. The economic stressors of the coming year are making companies refocus and shift directions to fill gaps which have existed for many years."
According to Gartner, insurers need more customer data, including more behavioural and preferential data, to effectively execute digital business strategies aimed at cross-sell/upsell, panoptic personalisation, dynamic customer engagement and revenue growth through new products/service.
With operational efficiency top of mind, especially as insurers face a possible economic downturn and the need to drive more value to stakeholders, the implementation of process change and technologies is key.
The survey found that over half of CIOs are increasing technology investments in 2023, with the most common areas being application modernisation, cybersecurity/information security and BI/analytics.
New demands, such as driving new CX or the inability to do straight-through processing (STP) due to back-office system limitations, are driving rejuvenated focus on application modernisation, especially around core systems.
New digital demands are also emphasising the need to make foundational enhancements, such as improved security, which insurers have failed to properly invest in.
Automation will continue to be a necessity in the coming year, however insurers will need to apply these tools to support areas that were previously overlooked or considered too complex, the analysts find.
Overall, Gartner has found many companies have a good automation foundation in place with high investments in the past, however much more is needed to support more advanced digitalisation strategies.
Harris-Ferrante says, "In 2023, creating the right technical foundation for agility and openness will be targeted, along with replacing legacy assets that create a talent and investment drain on the organisation."
The survey revealed that most insurers are seeking to reduce their large and costly infrastructure investments and are opting for cloud technologies, while only 31% of insurers said they are not reducing investment in 2023. Overall, the findings from the survey indicated insurers have mixed feelings about their technology investments.
Many insurers who focused on growing innovation said their digital technology investments exceeded value expectations. Over 50% of insurers who focused on operational excellence indicated they also exceeded value expectations. Despite this, the majority of insurance CIOs said they were either behind or just accomplished their value expectations, such as improving CX and increasing revenue.
Harris-Ferrante adds, "IT investments must support the three industry priorities: response to economic pressures, the talent dilemma and supply chain challenges. Industry conditions are driving insurance CIOs to shift their investments to match these business needs."
