A recent global survey by software engineering firm EPAM Systems, involving 200 insurance executives from various regions including Singapore, has revealed that outdated systems are the primary obstacle to innovation within the industry.
The report offers significant insights into the perspectives of insurance leaders and provides practical advice on digital modernisation to maintain a competitive edge.
It highlighted that the insurance industry has traditionally relied on older technology for its core functions. While these systems were once vital, they now pose a challenge to meeting the demands of modern business operations.
Outdated technology infrastructure is identified as the most significant barrier to adopting new digital tools and methodologies, with 45% of companies acknowledging it as a major impediment.
Additionally, 39% of respondents indicated that legacy systems are slowing down innovation and change, while 34% reported these systems hinder the swift introduction of new products.
The technological advancements of 2023 have influenced all sectors, including insurance.
Survey respondents pointed out that data solutions currently have the most substantial impact, while artificial intelligence (AI) is expected to be the most influential future technology.
Nearly 60% of respondents noted the significant impact of recent AI developments on their operations, and a third predicted that AI and machine learning would be the most impactful technologies in the coming five years.
Although the need for technological advancements is recognised at the executive level, the insurance industry is cautious in its investment approach. This hesitation is due to a risk-averse culture, the absence of urgent change drivers, and strained relationships between business and IT departments.
Raphael P. Young, regional managing director, head of financial services APAC at EPAM, said that Singapore’s insurance market is more digitally advanced than many other regions.
He attributed this progress to several factors:
Young also highlighted Singapore’s leading role in digital innovation, facilitated by government and regulatory support, a culture of innovation, and a cooperative industry approach.
“Because of the above factors, I would say Singapore is more advanced in many respects, including government and regulator initiatives, the innovative culture of the industry, and the open economy with both local, regional, and multinational companies that fuel the ecosystem. I meet various insurers almost every day in the APAC region, and I can attest to some of the particular attributes that are slightly different in Singapore compared to other markets, including digital leadership, innovation culture, adoption of digital tools, partnering attitude, and overall speed to market,” he said.
