A new survey by digital risk processing company Cytora has identified risk digitization as the primary technology priority among commercial insurers in North America and the United Kingdom.
The Cytora survey collected responses from 200 senior executives within global insurance firms. According to the findings, 79% of respondents indicated their companies intend to prioritize investment in risk digitization over the next two years.
This digitization encompasses processes such as new business, renewals, claims, and mid-term adjustments (MTAs), placing it ahead of other technological areas like catastrophe modeling, CRM, and policy administration systems.
Respondents most frequently identified revenue growth (22%), greater capacity for handling higher transaction volumes (19%), and enhanced service to brokers and customers (17%) as the main advantages associated with risk digitization.
When asked to identify the primary sources of inefficiency within their organizations, 62% highlighted the manual extraction of data from intake documents. Other challenges included inconsistent risk processing workflows across departments (55%) and the lack of unified data flow (52%).
Major developments pushed forward the digitization trend for insurers in recent years. One of the key factors has been the continued proliferation and evolution of AI and large language models.
The industry also explored blockchain technology to enhance efficiency and transparency. Smart contracts on blockchain platforms enabled automated processes, reducing human error and costs.
However, the transition has been marred by many challenges. Many insurers still grapple with outdated legacy systems that hinder the seamless integration of new technologies. These systems often lack the flexibility required for modern digital solutions, making the transformation process complex and resource-intensive.
For those who are undertaking digitization journeys, they are also faced with the dual challenge of implementing robust cybersecurity measures and complying with stringent data protection regulations to maintain trust and avoid legal repercussions.
The shift towards digital operations has also created a demand for professionals skilled in data analytics, cybersecurity, and emerging technologies. However, attracting and retaining such talent remains a significant hurdle, given the competitive landscape across industries.
Cytora’s survey also indicated an ongoing industry trend toward increased investment in artificial intelligence initiatives. Approximately 26% of those surveyed stated their organizations had invested at least £500,000 ($635,000) in AI initiatives during the past year, while 11% estimated their spending exceeded £1 million ($1.27 million).
Projected AI investment for 2025 revealed a further increase, with 28% predicting their organizations will spend at least £500,000 and 17% anticipating investments surpassing £1 million.
When examining the expected benefits of AI initiatives, increased operational efficiency was the most frequently cited advantage, selected by 59% of respondents. This was followed by improved customer and broker satisfaction (44%), greater integration of systems and data (41%), and improved understanding of risk (35%).
Additionally, the survey explored the impact of risk digitization on employee roles. Increased productivity was cited by 67% of respondents, while 65% mentioned improved talent retention and attraction. Other workforce-related benefits identified included opportunities for employee skill development (60%) and improved employee morale (57%).
Richard Hartley (pictured above), CEO of Cytora, said that insurers successfully utilizing AI to digitize risk management processes would gain significant operational advantages, potentially separating premium growth from rising expenses and enhancing strategic decision-making.
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