Legacy technology an impediment to digital growth for insurance carriers

Ernst & Young Global Ltd. (EY) released Tuesday the results of a survey of insurance firms in which the majority reported “legacy technology” was dragging their “digital growth” and few used predictive modeling for certain computerized sales campaigns.

“In the Americas, 96% of insurers cite legacy technology constraints as a major impediment to growth,” EY stated in a press release.

During the second quarter of 2013, EY conducted a survey “with participants from more than 100 insurance companies to understand how the digital agenda is reshaping the insurance sector.”

The survey had an “even split of participants” from life and non-life.

“Only 11% use predictive modelling to identify prospects for targeted, personalized email marketing campaigns, use online product comparison tools or encourage development of an online community ” EY stated in the report on the survey, titled Insurance in a digital world — The time is now. “A startling 89% do not leverage past interaction when recommending products or services to online customers.”

But insurance carriers “potentially have a wealth of data at their fingertips,” Doug McPhie, EY partner and Canadian insurance leader, stated in a press release. “But without the right analytics, they’re missing a big opportunity to better understand their customer, and improve their experience.”

The report included a chart of the “top inhibitors of digital growth,” broken down by global, global life and global non-life. In global non-life, 88% identified “legacy technology constraints” as a top inhibitor.

Nearly three-quarters (72%) identified “slow pace of delivery by insurers” as a top inhibitor while 45% identified intermediary or agent channel strength or resistance. About one in six (17%) identified “perceived customer/data security issues.

The survey found “significantly less use of mobile for even the most digitally enabled customers interactions.”

For example, 92% of respondents said they “provide information about our company and products” online, while only 47% of respondents said their firms provide the same service to mobile users. Seventy-two per cent provide quotes online while 43% provide them to mobile users.

More than half (57%) said they allow customers to submit complaints online while only 21% do so for mobile users. More than a third (39%) let customers submit and process claims online while only 23% said they provide the same for mobile users.

EY “aimed to weight responses to provide a balance of views from a diverse mix of insurers,” according to the report, while “each response was given an equal weighting at the national level by company.”