A changed economic environment, a restructuring of traditional insurance roles and changing technologies are creating a “perfect storm”, resulting in a significant shift in culture in the complex insurance market. Such are the findings of a report carried out by Celent and commissioned by Agencyport Software, an annual study of the attitudes and aspirations of insurance industry executives.

The study analyses survey responses and interviews of 108 senior IT decision makers from London, European and Global reinsurers and commercial and/or specialty insurers and reveals a changing internal culture in Lloyd’s insurers and further afield. Respondents of the survey highlighted the importance key capabilities in navigating these new waters: agility, a global outlook, the need for good data, digitisation and interconnectivity.

Respondents described agility as hitting the market faster, pouncing on distinct opportunities that are underserved – key for specialty insurers who are always niche hunting and who now have to use a variety of tools to give them an edge on the rest of the market. Agility is also about collaboration across silos, working closer together both with IT and with business partners who share a common purpose. Interviewees noted that parts of the system (IT or organisational) must remain fixed to enable agility: Speed of change is about reducing the number of decisions that must be made before a change is executed. For this reason flexibility and agility are distinctly different characteristics and cannot be interchanged. Authors of the report says the need for both efficiency and growth has taken a steel grip on the market.

Companies long comfortable in their market position and territory are looking to stretch outside their traditional boundaries to find new markets. The ability to scale is key, both in operations and systems, distribution platforms and product and services.

Data quality is recognised amongst respondents as a huge issue. Insurers need to get their internal data capture and management right first, then ensure they can provide their talent with trustworthy and complete data at the point of decision. This is recognised particularly in the London market, where leveraging data as an asset drives a change in culture throughout the whole organisation. It is evident that regulation is a major driver for this more than business strategy, forcing organisations to adapt and collaborate.

The survey findings reveal that digitisation is perceived both a threat and an opportunity. While customers are served faster, there is an increase in transparency and operating costs are reduced, it challenges the role and position of London as a centre for insurance and of European insurers in the market. Digitisation threatens to usurp the underwriter’s position with new data, algorithms and analysis and to out the margins, delivering transparency to customers and laying siege to the profits of the industry.

Interconnectivity is also perceived as both a threat and a necessity. Connectedness and swift answers bring transparency, more questions and automation, eroding the relationship-based business of the market and profits but bringing optimisations and cost savings that will safeguard the insurer and the market against marginalisation.

Craig Beattie, senior analyst, Celent said: “Amongst the insurers and reinsurers we spoke to there was a consensus that the world view in insurance has irrevocably changed. Like a perfect storm, internal and external forces are reshaping the industry. There is a fundamental shift in some, but not all, insurers in the market – culturally, in terms of leadership, attitude, data and technology, coupled with the wider influences on the markets, the increasing capabilities of local competitors, the rise of the influence of data, algorithms and models, that represents the two storms that have converged to shape the new normal.

“Those not yet affected will find themselves starved of business by hungry competitors. London market systems must work as a well behaved citizen in an ecosystem of other systems within the insurer, just as the insurer must operate as a well-behaved citizen in a wider community.”

“The purpose of The Insurance Industry Insight Report is to capture an annual consensus of industry opinion. Many of the findings within this report formalise what our customers and acquaintances in the industry have been telling us”, said Phil Race, Managing Director Agencyport Software Europe.

“While numerous themes have emerged this year, one trend is certain: as technology becomes a greater part of business solutions, IT leaders must be increasingly collaborative. Solutions overhauls involve people, processes and technology.”

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