ITC DIA Europe

The 2025 insurer: challenges, opportunities & the role of innovation 

Written by Roger Peverelli and Reggy de Feniks - Founders The DIA Community on Jul 14, 2022

At DIA Amsterdam 2022, Graham Gordon, Sapiens’ Product Strategy Director, presented his view on innovation and how it can both overcome challenges and create opportunities in the mid-term. In this editorial, we speak with him about how insurance technology is changing and explore what’s driving change.  

Sapiens provides digitally-led, cloud-based insurance technology platforms across P&C, Life and Reinsurance markets globally. In EMEA this includes everything related to Life, health, wealth, reinsurance and P&C for all verticals.  

Can you share a bit about your view on innovation?   

“COVID-19 has been a genuine catalyst for innovation in the insurance industry when it comes to digital technology. Not only because of changing distribution channels but also in terms of changing product needs.  

At the same time (insurance) technology is rapidly changing to meet expanding needs for new products and distribution models. This change in technology is being led by innovation and new opportunities that today’s technology offers. With so many options, how do insurers know where to invest and why knowing that whatever solution they choose will become obsolete in no time?  

And more importantly: what drives innovation? Is it driven by customers’ needs and expectations or is it by what insurers see as the best technology investments?” 

Can you elaborate on that?  

“Insurers have many decisions to take when it comes to technology investment, be it to launch new products, work with new partners or add new channels. They need to prioritize, both in terms of investment and time.  

I see connectivity becoming an important factor in delivering the agility insurers will need in 2025. Our customers are likely to see future sales channels changing from intermediaries to comparison websites that then diversify towards models based on dashboard data, mobile app live data, for car insurance for example, or embedded insurance as an add-on for the likes of Airbnb, e-scooter rental, IoT devices or even smart data within people’s homes.  

Nevertheless, when it comes to digital transformation and the next steps forward from core legacy systems, ‘what are the drivers for insurer investments?’ Recent research by Sapiens shows a change from recent years, with 32% implementing products and technologies defined by expectations from customers. Only 28% of insurers said they were implementing solutions primarily aimed at adapting their way of doing business by improving legacy core platforms.”  

What do you see as insurers’ big challenge?  

“Our customers already encounter challenges I see as certain to become more significant going forward. A major challenge is the ability to move data between organisations and systems. This is an area where APIs can come into play to improve connectivity.  

Furthermore, many insurers struggle to implement the ingestion of real-time data. While this is often talked about in theory, in reality, it is a big challenge. Lastly, there is the challenge of becoming truly digital. Be it growing the right talent pools, assigning the right roles, teams and processes and quantifying time scales, achieving this is a tough call for so many reasons.  

The answer for many insurers will be managing to stay ahead of customer needs via agile models and digital, cloud-based platforms. In the end, these will automate a lot of the industry, reduce costs and diversify the way buyers consume products.” 

Do you see some clear examples? 

“Collaborating with our customers has given us an insight into what they are doing to ensure they stay in the game. Coming back to the point of ‘pure digital’ being critical, we see the aim of true, end-to-end automation as the real prize. Additionally, agility means speed, and speed means flexibility. Existing products are being commoditized and margins going down so the speed of launching new products, often without decades of data, or any data, will be key. Sapiens has also experienced how gamification tools can increase customer loyalty and improve the lives and experiences of the insured, making it easier to retain them. Designing new value propositions with disruptive tools and portals ensures many innovative players stay on top of customer engagement and sharpen their competitive position, despite new distribution models that pop up.” 

How do you look at the future? 

“Looking at my previous question about ‘who and what drives the best model’, in my honest opinion it is probably both. I also foresee that big challenges are yet to come, possibly in the form of companies like Amazon and embedded insurance linked to product brands instead of insurance brands.  

As Sapiens we advise you to invest wisely in new technology rather than legacy systems, to ensure you stay on top of what your customers expect to buy, how they expect to buy it and go for the tools that make it work and make customer journeys seamless, simple and competitive.” 

Who is Sapiens? 

Sapiens International Corporation (NASDAQ and TASE: SPNS) empowers the financial sector, with a focus on insurance, to transform and become digital, innovative and agile. Backed by 40 years of industry expertise, Sapiens offers a complete insurance platform, with pre-integrated, low-code solutions and a cloud-first approach that accelerates customers’ digital transformation.  

Serving more than 600 customers in 30 countries, Sapiens offers insurers across property and casualty, workers compensation and life markets the most comprehensive set of solutions, from core to complementary, including Reinsurance, Financial & Compliance, Data & Analytics, Digital, and Decision Management.  

Sapiens’ team of more than 4,200 employees operates through its fully owned subsidiaries in North America, the United Kingdom, EMEA and Asia Pacific. 

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