The Importance Of Digital Technology In The Insurance Industry

The traditional processes that have characterized the insurance industry are fast changing due to technological innovations (Equinix Inc, 2014). Distribution has expanded to include different channels between the insurance companies and customers. Internet and mobile devices are the new sales channels. However, they have a small market share with reference to premiums. Sales are still dominated by agents and brokers among other intermediaries. Despite this, the data on e-commerce insurance hide the effect that new innovations have had on the process of distribution (Swiss Re, 2015). This paper analyses the impact on insurers of developments in digital technology and recommends how insurers could respond. It has often been said that information technology can change entire industries. According to Crowston and Myers (2004), the inception of digital technologies allows the creation of new business models. Digital technologies have been defined by Bharadwaj and Sawy (2013) as the integration of information, computing, …show more content…
It is important to have standards at different levels including data, process and most importantly infrastructure. In so doing, insurers will be able to interconnect with fast rising external sources of information. They will also interconnect with new markets across new technologies. The most significance is the need for insurers to adopt new channels of delivery. Striking the right balance between centralized operations and outsourced activities would be important as it would allow insurers achieve the triple bottom line comprising analytical ability, adherence to regulations and exceptional customer offerings (Equinix Inc, 2014). Everything is summed up by Cognizant (2016). In order for insurers to be successful in this digital era, they have to re-evaluate their services, business model and operations so as to capitalize on the strength of game-changing