A digital strategy will be ‘critical’ for the long-term success of insurance businesses, a new report has found.
In a new white paper released by global law firm DLA Piper, entitled
Digital Transformation in the Insurance Sector, the power of digital transformation is laid bare.
“The digitalisation megatrend is transforming the expectations of consumers across the globe, as internet and mobile phone usage increase year-on-year,” the report notes.
“Digital transformation is now seen as a key ‘game changer’ and catalyst for growth in the insurance sector, with the sector being ripe for disruption.”
Samantha O’Brien, DLA Piper co-head Insurance Sector Australia, said that as the digital transformation of the industry takes hold, many legal challenges come to the fore.
“Digital transformation in the insurance sector is critical to open opportunities and remain competitive, but with this transformation comes many legal challenges,” O’Brien told
Insurance Business.
“For example, creating robust contracts to leverage agile methods and processes can be hindered by strict governance and compliance requirements.
“And there’s a myriad of legal issues associated with capturing, processing and using big data. For those in the sector that operate globally, this creates significant challenges.
“The shift from people to software - which will inevitably lead to the need to upskill employees and or a degree of restructuring - will also create challenges for HR departments and legal teams.”
O’Brien stressed that while the insurance sector continues to invest heavily in insurtech and other technology avenues, more can still be done to improve digital transformation.
“They are investing heavily in digital transformation by establishing corporate venture capital funds to invest in new technologies and start-ups, establishing innovation hubs or labs and partnering with technology companies,” O’Brien said.
“But despite this, most players in the insurance sector are digitally immature, with only 23% able to submit and process claims digitally.”
Regulators continue to grapple with the changing nature of the insurance industry. As insurtech continues its evolution, O’Brien noted that it will be important for regulators to not only foster digital development but also protect customers and clients.
“Achieving regulatory compliance is seen as a major obstacle for firms looking to bring innovative insurtech products to market,” O’Brien said. “But Australia is competing on the global stage in this respect.
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ASIC already has an innovation hub in place and is looking to establish a regulatory sandbox. They also boast a much speedier authorisation process for new firms compared to other global regulatory bodies.”
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