AutoRek, the financial services software provider, surveyed over 500 mid-level professionals working in insurance firms in the UK and the US.

The report found that while over a quarter of respondents focused on customer experience, acquisition, and retention in the last two years, the next two years will be focused on increasing operational resilience. This is the ability of a company to adapt and respond effectively to operational disruptions. 

The focus on operational resilience is in response to the Federal Conduct Authority’s (FCA) recently imposed operational resilience guidelines on UK insurers.

Over the next two years, 42% of UK firms will place streamlining their finance operations as a priority, doubling from the previous two years. This is much needed in a sector which is complex in nature. 38% of respondents pointed to process complexity as a material operational challenge, rising to over half for brokers. 

“There are many challenges which firms have faced and will continue to face over the coming years,” said Gordon McHarg, CEO at AutoRek. “How well-prepared firms are to meet the challenges discussed throughout this report will define their success over the months and years to come.”

Three quarters of insurance organisations also acknowledge that legacy technology has a negative impact on their operations. As a result, the survey found that tech budgets for 2023 and 2024 will favour operations automation. 

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However, the report also points out the insurance sector has a long way to go before fully embracing automation. Over 8 in 10 firms say that their finance departments rely on spreadsheets, over a third of firms say they rely on excel for reconciliations. 

What automation would look like in the InsurTech landscape looks different depending on which sub-sector it is applied to. 40% of respondents across all markets say faster processing times are the key driver towards automation. However, life insurers say automation would bring improved data confidence, and reinsurers say it would enhance overall efficiency. 

“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,” said McHarg.