Chief financial officers in the insurance sector recognize the potential for disruptive technologies on their businesses and are leading such digital efforts, but identified cost and security concerns as key obstacles, according to a new report.
Insurance CFOs are more likely than their peers in other industries to say that insight into new technologies is a key requirement for their role, with 45% of insurance sector CFOs expressing this opinion, according to the report published Tuesday by consultancy Accenture.
“And they are highly likely to set time aside to explore the impact of disruptive technologies on the business,” the report stated. “They see this as a growing requirement for their role and want to get involved in technology initiatives as early as possible.”
Steve Culp, senior managing director of Accenture Finance & Risk in Chicago, said in the report that it is interesting that insurance CFOs are focusing more on technology-enabled innovation than those in other sectors, especially banking.
“One explanation could be that the banking sector has been subject to a greater number of regulatory changes in recent years,” he said in the report. “Insurers may also have unlocked some much-needed innovation after witnessing disruption in their industry.”
Insurance CFOs are also significantly more likely than those in other sectors to say that finance should take a leading role in identifying and managing control of the most critical data, according to the report, which showed that 57% of insurance CFOs expressed this opinion. By contrast, the next highest sector of CFOs expressing this opinion was consumer goods at 45%.
More than eight in 10 insurance respondents, 82%, are already starting to take ownership of data, which is seen as an organization’s “crown jewels,” compared with 75% in banking, according to the report.
One obstacle to increased utilization of artificial intelligence, blockchain and machine learning is the cost associated with such technologies while information security is another challenge, according to the report.
“Respondents in insurance are more likely than those in other sectors to say that information security is a principal barrier stopping them from adopting the automation tools that would free up their time,” the report stated. “Security concerns are also likely to be holding insurers back from implementing cloud solutions, which are key to digital transformation.”
In addition, Accenture’s research identified hiring and upskilling talent to execute the advanced analytics enabled by additional data and advanced tools as another key challenge for the insurance industry. Currently, 23% of insurance respondents say they are looking into acquisition to source specialist talent, according to the report.
Accenture surveyed 97 insurance professionals from December 2017 and April 2018 and broke out their responses as part of a broader research project about finance sector CFOs and digital transformation.