Insurance companies are facing numerous headwinds, ranging from the rising cost of claims to an uncertain economic outlook and an increasing regulatory burden, particularly in the areas of data protection and privacy.
To respond and adjust to this evolving landscape, many insurance firms have aggressively pursued system modernization in recent years. In fact, technology and IT spending across the insurance industry is expected to increase by more than 25% between 2022 and 2026, building on an established trend of rising IT costs for insurance companies, ostensibly driven by system modernization.
But the increasing complexity of the insurance technology stack brings its own set of challenges. Insurance companies typically employ a variety of technology solutions to serve key functions, including point of sale (POS) and customer onboarding, underwriting, policy management, claims management, processing, billing, and more.
Unfortunately, many of these discrete systems don’t communicate with each other effectively. This problem is particularly acute when firms employ a mix of homegrown and commercially available solutions, but it persists even with integrated commercial suites, due to the prevalence of multiple customizations and operational silos.
This lack of communication and collaboration means that insurance companies are often challenged to integrate processes across multiple systems and departments—projects that require manual effort and take longer than they should.
This is why many insurers that have pursued digital transformation have not realized the expected return on investment, at least not yet. From 2016 to 2021, personal property and casualty carriers saw an average 5% reduction in operating costs. But these gains were more than offset by a 7% increase in IT costs, driven mainly by “system modernization.”
Here’s how implementing a modern-day workload automation and orchestration solution like OpCon can help your insurance company overcome these challenges and achieve superior return on your technology investments.