Legacy Systems Hampering Innovation in Global Insurance Industry
A recent global survey by EPAM Systems, involving 200 insurance executives, has revealed that outdated systems are the primary obstacle to innovation within the industry. 🌐
A comprehensive global survey conducted by EPAM Systems, which included 200 insurance executives from diverse regions such as Singapore, has brought to light the pressing issue of outdated systems obstructing innovation in the insurance sector.
The report provides valuable insights into the viewpoints of industry leaders and offers actionable advice on digital modernization to stay competitive in a rapidly evolving market. It underscores that while legacy technology was once the backbone of insurance operations, it now poses a significant challenge to meeting the demands of contemporary business environments.
Legacy Technology: A Major Obstacle
The survey identified outdated technology infrastructure as the primary barrier to adopting new digital tools and methodologies. An alarming 45% of companies acknowledged that legacy systems are a major hindrance. Moreover, 39% of respondents reported that these systems are slowing down innovation and change, while 34% noted that they impede the swift introduction of new products.
New Technology as a Business Enabler
Technological advancements in 2023 have impacted all sectors, including insurance. Survey participants emphasized that data solutions currently have the most substantial influence, while artificial intelligence (AI) is poised to be the most transformative technology in the near future. Nearly 60% of respondents highlighted the significant impact of recent AI developments on their operations, with a third predicting that AI and machine learning would be the most influential technologies over the next five years.
Executive Recognition of Technology's Value
Despite the recognized need for technological advancement, the insurance industry remains cautious in its investment strategies. This reluctance stems from a risk-averse culture, a lack of urgent change drivers, and strained relationships between business and IT departments.
Digital Advancements in Singapore
Raphael P. Young, Regional Managing Director and Head of Financial Services APAC at EPAM, pointed out that Singapore’s insurance market is ahead of many other regions in terms of digital advancement. He attributed this progress to several factors:
Progressive Regulation: The Monetary Authority of Singapore (MAS) has initiated projects like Project MindForge to promote responsible AI use, enhancing industry resilience.
AI Integration: Numerous Singaporean insurers have incorporated AI into core functions such as underwriting and claims, leading to increased efficiencies.
Digital Identity Utilization: Singaporeans frequently use SingPass for secure digital transactions, showcasing high digital engagement.
Collaborative Ecosystem: The local technology ecosystem supports digital transformation through partnerships among technology platforms, service companies, and government-sponsored events.
Young also emphasized Singapore's leadership in digital innovation, driven by government and regulatory support, a culture of innovation, and a cooperative industry approach. "Because of these factors, I would say Singapore is more advanced in many respects, including government and regulator initiatives, the innovative culture of the industry, and the open economy with both local, regional, and multinational companies that fuel the ecosystem. I meet various insurers almost every day in the APAC region, and I can attest to some of the particular attributes that are slightly different in Singapore compared to other markets, including digital leadership, innovation culture, adoption of digital tools, partnering attitude, and overall speed to market," he said.
Original Article was Published here: https://www.insurancebusinessmag.com/asia/news/technology/legacy-systems-stalling-innovation-in-singapores-insurance-industry-survey-finds-491034.aspx