What's Happening?
A recent survey by Clearwater Analytics reveals that insurers in the Asia-Pacific (APAC) region, managing approximately $3.8 trillion in assets, are facing significant challenges due to outdated technology
systems. Despite 87% of these insurers claiming to be ahead in digital transformation, 93% acknowledge that legacy systems are hindering their business growth. The issue is more acute in larger firms, with 97% of those managing $50 billion or more in assets reporting constraints. The survey also highlights that short-term operational focus and staffing issues related to managing older systems are prevalent concerns. Resistance to adopting new technologies and operating models is widespread, with 95% of respondents noting employee reluctance. Additionally, the survey points to a lack of diversity in thinking and background as a contributing factor to industry challenges.
Why It's Important?
The findings underscore a critical gap between perceived digital advancement and the reality of managing outdated technology in the insurance sector. This disconnect could impact the competitiveness and efficiency of APAC insurers, potentially affecting their ability to innovate and meet future challenges. The reliance on legacy systems not only hampers growth but also poses recruitment challenges, as firms struggle to find talent capable of managing older technologies. The resistance to change and lack of diversity could further stifle innovation and adaptability in a rapidly evolving market. As the industry anticipates increased merger and acquisition activity, the ability to integrate and leverage new technologies will be crucial for sustained growth and competitiveness.
What's Next?
The survey suggests that APAC insurers need to prioritize long-term strategic planning over short-term operational fixes to overcome the constraints of legacy systems. Addressing the recruitment challenges associated with outdated technology and fostering a culture open to change will be essential. As the industry braces for more mergers and acquisitions, insurers must enhance their digital capabilities to remain competitive. This may involve investing in new technologies and diversifying their workforce to bring in fresh perspectives and skills. The sector's ability to adapt to these changes will determine its future success and resilience in the face of evolving market demands.
