Insurance company leaders are expected to double down on modernization efforts and on implementing artificial intelligence (AI) to improve risk assessments in 2025. Technology firm, Kyndryl Canada also believes some companies will recruit senior leaders from customer-focused industries in the year to come.
Key focus areas for IT insurance leaders include integrating climate data into risk assessment efforts, investing in AI-enabled, end-to-end solutions, beginning with first-notice-of-loss claims, and investing in customer centric leadership and talent.
Other key findings in the report produced by Kyndryl, entitled Navigating the readiness paradox, include the finding that 56 per cent of insurance leaders are concerned that their IT tools or processes are outdated or close to end-of-life, despite 94 per cent also reporting confidence that their IT infrastructure is best in class.
Tech readiness paradox
“The study reveals a tech readiness paradox among business and IT leaders, who express confidence in their current technology posture while expressing concern about its readiness to address future challenges,” the report’s researchers say about the survey responses across all industries. Broken down, they say 94 per cent of insurance leaders are confident their IT infrastructure is best in class (90 per cent across all industries said the same), but only 39 per cent of those leaders say their IT infrastructure is ready to manage future risks – this, in line with responses from other industries, as well.
Lowest readiness scores for cyberattacks
Among the survey’s respondents (Kyndryl surveyed 3,200 leaders and senior decision makers across 17 markets and 25 industries), 68 per cent of insurance leaders struggle with the pace of innovation and are more likely than those in other industries to say that regulation is moving too fast. As for climate, 64 per cent of insurance leaders reported concerns about environmental and climate disruptions with only 26 per cent saying they feel ready for these risks. Insurance leaders also report the lowest readiness scores for cyberattack – 23 per cent report being ready to manage future risks, compared to 30 per cent across all industries who said the same.
Insurance leaders also report the lowest level of readiness to use artificial intelligence: 22 per cent say they’re ready compared to 29 per cent who said the same across all industries. The industry’s leaders, however, report the highest levels of readiness when it comes to addressing skills gaps and talent. “They also report the highest confidence that their in-house IT skills and talent are best in class,” they write. “Some insurers have started to tap talent from major retailers and high tech.”
The industry’s leaders also report comparatively higher levels of readiness for emerging technologies like quantum computing and edge computing (AI readiness being the exception where they report being the least ready of any industry).
“End of life tech is a looming challenge. IT is the best line of defense to mitigate risk, yet most are in earlier stages of their tech modernization journey,” the paper states. They add that end-of-life technology concerns are on par with those in other industries. “Keeping tech modernized is hindered by complexity and prioritization paralysis. Despite significant AI investments to drive modernization, leaders struggle to see positive return on investment (ROI).”
Industry ahead in automation, behind in best practices
They add that “readiness” is a moving goal post, thanks to the speed of technological innovation. In matters of automation the industry is ahead – 12 per cent of IT events, on average, are resolved through automation in the industry, compared to just eight per cent among Kyndryl’s customers on average. At the same time, the industry is slightly behind in best practices adoption, with 71 per cent adopting best practices, compared to Kyndryl’s customer average of 75 per cent.
Insurance respondents were also more likely than others to say that their organizations are struggling with technical debt, citing it as a top challenge to tech modernization. They say 24 per cent of insurance respondents say tech debt is a problem, compared to the 17 per cent, all-industry average.
The report also looks at digital technology investment, at AI and machine learning investments and areas of support needed to help modernization efforts. Leadership support, talent management support and integrating new technology into existing infrastructure were all noted as top concerns. “In line with other industries, insurance businesses are looking for more support on leadership decision-making and talent management to navigate tech modernization,” they write.
Going beyond transformation
“To overcome challenges, organizations should consider a shift in mindset: Readiness goes beyond preparedness and resilience – going beyond transformation to arrive at transformative and sustainable performance,” they add. “IT is core to this expansive vision.”
To help move forward, they also suggest decision makers “weigh the fantastic vs. the familiar and embrace their interdependence. Emerging technologies offer tantalizing opportunities to grow in new directions, but leaders must weigh new investments alongside upgrades to their existing IT.”
They also recommend starting with shorter-term success metrics to drive longer-term value. “Smaller starts can help build a better case to move into more complex projects.”