Digital maturity among North American life insurance companies remains low, according to a recent survey by Gartner, Inc. and LOMA. Almost half (49 percent) of insurers surveyed said they do not have a digital strategy in place, revealed the study released Aug. 17.
The survey was conducted in February and March of this year among 51 LOMA members in North America.
Gartner, Inc and LOMA say the findings indicate that the transformation to digital business has been difficult for many life insurance businesses and IT leaders as they try to innovate within a traditional culture that has proven resistant to change.
Risk-averse and traditional
"While other insurance sectors, such as property and casualty (P&C) and health, are transforming at a faster pace, the life insurance industry continues to be more risk-averse and traditional in its business approach," said Kimberly Harris-Ferrante, vice president and distinguished analyst at Gartner. "IT leaders in North American life insurers often underestimate the impact of technologies and trends such as disruption from insurtech companies, changes in consumer lifestyle, and growing adoption of the Internet of Things (IoT) among consumers for health and lifestyle management."
According to the study, participants considered heightened security and cybersecurity risks to have the biggest impact on the industry during the next three years. More-unpredictable risks, such as changes in consumer lifestyle, spending and savings, were considered less threatening.
"The failure to understand the pace and breadth of industry change will be risky in the long term to life insurers, which will find that it is increasingly difficult to respond to new market entrants and keep up with consumer financial and life insurance needs," said James Huffman, second vice president, Management Solutions, LOMA. "Our research demonstrates that companies that do not aggressively establish an enterprise-wide digital program will fall behind, leaving them vulnerable to traditional and nontraditional competitors."
Gartner and LOMA say that the study’s findings show that it is critical for life insurance CIOs to rethink their approaches to digitalization and that those insurer which are unable to transform will face higher risk due to market disruption and growing pressures from outside the industry.
Gartner clients can find out more by consulting "North American Life Insurers Take a Slow and Tactical Approach to Digitalization." LOMA members can learn more about the study at LOMA.org.