Technology tops risk for insurers in APAC
Multiple technology projects could put a strain on insurers.
Technology is the number one risk for insurers in the Asia Pacific and third globally according to the Insurance Banana Skins 2021 report by PwC.
According to the report, modernisation comes with a cost as juggling multiple technology modernisation projects can put a strain on the insurers especially when resources are required to strengthen cyber resilience simultaneously.
This is even more so for insurers with legacy platforms as it is more challenging for them to embed Robotic Process Automation and artificial intelligence in their daily processes. Insurers are aware that they need to reduce complexities over their existing systems and get rid of the drag by legacy technology however upgrading or migrating to a new platform is not an easy alternative due to the volume and long-tail data that the insurers hold.
“In certain instances, replacing the legacy systems may be more costly than continuing and building plugs around the existing ones. This is certainly not a straightforward decision which needs to be made in the context of the overall business strategy,” PwC said.
Additionally, the talent shortage is impacting digital transformation initiatives. There is great demand for IT specialists to support these digital transformation initiatives. PwC said these IT specialists need to be equipped with complementary skill sets including, insurance business knowledge, innovative skills, and project management skills
Meanwhile, crime, specifically cybercrime, is a growing risk for insurers, ranking second in APAC.
The report said that rapid digital transformation and remote working arrangements driven by the pandemic have brought about increased cybersecurity risk.
“As insurers move to digitalise most processes with greater reliance on automation, it is imperative that new processes and controls are designed properly with IT and data vulnerabilities comprehensively considered,” PwC said.