According to recent research by AutoRek, a reconciliation and finance automation fintech, insurance companies are changing their strategic priorities to prioritise operational resilience, efficiency, and control.
The report, titled “Insurance industry outlook 2023: Strategic priorities, operations, technology and financial controls,” found that while 26% of respondents had focused on customer experience, acquisition and retention, and back and middle-office optimisation over the past two years, firms plan to reduce their efforts in these areas in favour of overall operational resilience in the next two years.
The report also found that US insurance organisations have optimised and streamlined their finance operations to a greater extent than their UK counterparts, with 30% of US respondents stating that their organisation has done so, compared to just over 20% of UK respondents.
This could explain why US insurance professionals are more likely to report their firms as highly profitable than UK professionals, AutoRek noted.
The report comes after the UK’s FCA recently imposed new operational resilience guidelines on insurers, and with US regulators reconsidering their approach to the issue.
UK insurance firms are increasingly planning to streamline their finance operations, with 42% stating it as a priority for the next two years, according to the survey.
The survey also found that legacy technology has a negative impact on the operations of 75% of insurance organisations, and tech budgets for 2023 and 2024 are expected to favour accounts receivables and operations automation.
“As the report sets out, there are many challenges which firms have faced and will continue to face over the coming years, both from an external market perspective and competing business-as-usual processes perspective,” Gordon McHarg, AutoRek’s CEO commented.
“It’s promising to see firms continuing to invest in technology across finance and operations departments, which often played second fiddle to front-end enhancements. Adopting the latest advancements in technology and automation is instrumental to the success of insurance organisations. The question for most will be to decide which areas to focus investments on, especially given the highly specialised nature of the insurance industry,” McHarg added.
