Not unlike favorable attributes for professional athletes, speed and agility are top priorities for insurance companies throughout their infrastructure for innovative product development and an enhanced customer experience, according to a new survey from German-based SAP SE, a multinational software corporation that makes enterprise software to manage business operations and customer relations.
SAP SE’s survey, which includes 200 insurance executives who attended the IASA Annual Conference in June, reveals a number of factors motivating insurers’ innovation strategies.
- 34% of respondents indicated that rising consumer expectations are their primary driver for new product development
- 22% indicated changing regulatory demands
- 20% indicated availabilty of new technologies
Insurers agree, the survey says, that the growing customer base of Millennials—generally considered to be people between the early 1980s to the late 1990s—has heightened expectations for their carriers. In fact, 55% of respondents cited convenience as Millennials’ top priority when seeking insurance products, with low cost (22%) and relationships with their agents (16% percent) followed by brand recognition (8%).
As a result, this has forced many insurers to consider a more flexible product strategy. More than half (52%) of the respondents noted that their primary strategy to reach Millennials has focused on investing in online, mobile, and social technologies to reach customers across channels. What’s more, 21% indicated they are tailoring products to suit Millennials’ unique needs and 12% are investing in data analytics to segment and target communications.
Yet while insurers remain focused on the customer experience, updating their back-end infrastructure continues to be a priority as they seek to inject agility and speed throughout their processes. More than half (51%) of the respondents indicated their organizations have adopted cloud computing in some capacity. While nearly half of these respondents have implemented cloud-based systems for back-office functions, others have adopted cloud for mission-critical functions like policy administration (18%), product development (7%), claims processing (6%), and risk management (6%).
“Cloud computing has matured and we’re seeing insurers shift from leveraging the cloud for just back-office functions to implementing cloud across the entire organization,” Ross Orrett, global head of Insurance Industry Innovation and Development, SAP, said in a release. “Insurers are becoming more adaptable and laser-focused on meeting changing customer needs. To be innovative in its products and the way it serves agents/brokers and customers to meet these demands, carriers are investing in industrializing the back-end with integrated, agile infrastructure while innovating across these systems.”
Insurers also acknowledged the barriers to cloud adoption in their organizations. One-third of respondents (34%) cited security concerns as the primary challenge for adopting cloud computing, followed by lack of internal buy-in (28%), budget and financial concerns (13%), unstable technological infrastructure (13%), and lack of time (12%).