Strategic priorities in the global insurance sector are shifting as firms increase their focus on operational resilience, according to new research from AutoRek.
AutoRek published a report titled Insurance industry outlook 2023: Strategic priorities, operations, technology and financial controls.
The report sought to understand the current issues facing the insurance industry today, as well as identify key trends.
It found that over one-quarter (26%) of respondents have focused on customer experience, acquisition and retention, and back and middle-office optimisation over the last two years. However, over the next two years, firms reportedly plan to reduce efforts in these areas in favour of ensuring overall operational resilience.
AutRek noted that this news comes after the FCA recently imposed new operational resilience guidelines on UK insurers, and with US regulators reconsidering their approach to the issue.
The report also found US insurance organisations have gone to greater lengths to optimise finance operations than their UK counterparts, with 30% of US respondents saying they “strongly agree” that their organisation has optimised and streamlined their finance operations.
This is compared to just over 20% of UK respondents, which could explain why US insurance professionals are more likely to report their firm to be highly profitable than those in the UK.
However, AutoRek reported that over the next two years, 42% of UK firms plan to streamline their finance operations as a priority, which has doubled from the previous two years. Only a third of US respondents said the same.
The survey also revealed that US insurance firms have more agile back-office systems than their UK counterparts, likely because they’ve also been quicker to adopt new technology. US firms are more active in reviewing their back-office systems, with 30% saying they do so at least every six months, compared to only 20% of UK firms. The overarching trend, AutoRek said however, is that they view updating back-office technology to be a significant resource burden.
Gordon McHarg, CEO at AutoRek, said, “As the report sets out, there are many challenges which firms have faced and will continue to face over the coming years, both from an external market perspective and competing business-as-usual processes perspective. How well-prepared firms are to meet the challenges discussed throughout this report will define their success over the months and years to come.
“It’s promising to see firms continuing to invest in technology across finance and operations departments, which often played second fiddle to front-end enhancements. Adopting the latest advancements in technology and automation is instrumental to the success of insurance organisations. The question for most will be to decide which areas to focus investments on, especially given the highly specialised nature of the insurance industry.”
Earlier this year, Insurify published a report that revealed that home market volatility will likely continue as home insurance rates are expected to continue to rise.
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