Nine in 10 Insurance Leaders in Europe Say Customer Experience is the Top Driver of Digital Transformation

Rhea-AI Summary

ISG's Pulse of the Insurance Industry survey reveals that 42% of European insurers report rising security vulnerabilities amid increasing digitalization. The survey indicates that 87% prioritize customer experience in digital transformations, with a focus on mobile solutions. Key drivers include competitive pressure (77%) and rapid market response (75%). Over 40% of insurers plan to invest more in IT security, with a notable emphasis on hiring skilled professionals in data analytics and cybersecurity. The report highlights shifting market dynamics and the need for insurers to adopt agile, digital-first strategies.

Positive

• 87% of respondents prioritize improving customer experience in digital initiatives.
• 42% plan to enhance their online presence for direct sales.
• Over 40% expected to increase IT security investments, indicating focus on cybersecurity.

Negative

• 42% of insurers report increasing security vulnerabilities due to digitalization.
• Democratization of IT and remote work models are increasing risk exposure.

ISG Pulse of the Insurance Industry survey finds 42% report security vulnerabilities increasing along with digitalization

FRANKFURT, Germany--(BUSINESS WIRE)-- Demand for improved customer experience is the top driver of digital transformation in Europe’s insurance industry, but with growing digitalization, insurers report increasing security vulnerabilities, according to the results of the second annual ISG Pulse of the Insurance Industry survey, conducted by leading global technology research and advisory firm Information Services Group (ISG) (Nasdaq: III).

Eighty-seven percent of survey respondents cited improving customer experience as the top priority in designing digital transformation initiatives, with a focus on “mobile-first” and platform-based solutions for customer acquisition and management, product and offer personalization, and simplification of customer touchpoints such as claims and document management.

The survey results also showed increasing security vulnerabilties are accompanying the move to internet-based business processes, with 42 percent of respondents reporting rapidly growing security risks originating from porous customer and workplace technology touchpoints. Democratization of IT and remote work models have further increased risk exposure.

The ISG Pulse of the Insurance Industry survey, sponsored by Hexaware Technologies, surveyed 210 business and IT leaders at European insurance companies during the third quarter of 2021.

Other drivers of digital transformation are competitive pressure, cited by 77 percent of respondents, and faster response to new market requirements, mentioned by 75 percent of respondents.

“The path to all-encompassing customer centricity is irreversible,” said Johanna von Geyr, partner and ISG EMEA insurance lead. “Insurance companies—like businesses of all types—recognize the need to further simplify products and business processes to retain existing customers and remain competitive.

“This trend will increase pressure on IT departments to replace legacy systems, modernize the application landscape and free up resources to develop new capabilities, better manage risk and transition to the platform economy,” she added.

With Insurtechs and other born-ditigal competitors poised to make market inroads, Europe’s insurers say expanding their platform businesses is a top priority. Of those surveyed, 43 percent say they would expand their online presence into a direct sales channel, with similar interest in mobile apps (42 percent), marketing via themed platforms (37 percent), and digital payment (34 percent).

Forty-five percent saw expanding their platform businesses as an efficient way to gain a more comprehensive understanding of customers' needs and using that market knowledge to tap into new opportunities to create value.

With a growing digital landscape leading to more cyber risk, insurers plan to spend more on cybersecurity in the future, von Geyr said, citing the survey findings. “More than 40 percent of the European insurers we surveyed are expected to increase their investments in IT security technologies,” von Geyr said. “We expect the cybersecurity market will experience resulting growth in the next few quarters.”

Von Geyr noted the rise in cyber breaches also offers insurers the opportunity to help their customers improve cyber resilience with expanded cyber coverage and a holistic risk management approach. Some insurers are bundling cyber coverage with features such as cyber risk reports, cybersecurity training and risk advisory services.

To expand their digital capabilities, 46 percent of survey respondents expressed a desire to hire more qualified staff, particularly in data analytics (42 percent) and cybersecurity (40 percent), and 34 percent of respondents said they are seeking suitable IT service providers.

“Most respondents see the benefits of digitalization, such as cost reductions and increased speed, as far outweighing the risks,” von Geyr said. “The rise of millennial buyers, emerging competition, margin pressures, and a tightening regulatory environment have created a landscape in which only agile, data-driven, digitally enabled insurers will survive. Insurance companies are realigning their operations to an ‘online-first’ customer engagement strategy to meet these changing market conditions.”

The ISG Pulse Check – State of European Insurance Industry 2021 report is available on this website.

About ISG

Information Services Group (ISG), (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 700 clients, including more than 75 of the world's top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,300 digital-ready professionals operating in more than 20 countries— a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry's most comprehensive marketplace data. For more information, visit www.isg-one.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211213005168/en/

Philipp Jaensch, ISG

+49 151 730 365 76

philipp.jaensch@isg-one.com

Matthias Longo, Palmer Hargreaves for ISG

+49 152 341 464 63

mlongo@palmerhargreaves.com

Source: Information Services Group, Inc.

FAQ

What are the key findings of ISG's 2021 survey on the insurance industry?

ISG's 2021 survey found 42% of insurers report increasing security vulnerabilities amid digitalization. 87% prioritize customer experience, with significant emphasis on mobile and platform-based solutions.

How do European insurers plan to respond to increasing cybersecurity risks?

Over 40% of European insurers surveyed plan to increase investments in IT security technologies to address growing cyber risks.

What is the main driver of digital transformation in the insurance industry according to ISG?

Improved customer experience is the top driver of digital transformation, as reported by 87% of survey respondents.

What percentage of insurers reported competitive pressure as a driver for digital transformation?

77% of survey respondents cited competitive pressure as a significant driver for digital transformation within the insurance sector.

What role does cybersecurity play in the future strategies of European insurers?

Cybersecurity is increasingly prioritized, with over 40% of insurers planning to bolster investments in IT security to mitigate risks.