In terms of technological advancement, insurance industry is considered as a late mover or rigid in terms of adapting. In contrast to manufacturing industry, where organizations have spent most of the past two decades standardizing their IT, in insurance industry, the use of proprietary software systems is still the norm. This is because of the following reasons:
- High levels of complexity
- Immature software market
- Budget constraints
- Inertia
Despite these factors, the future of insurance industry lies in the standardization of its softwares. These steps will not only lead to cost reduction and reduction in adaption time, but will also give the firms - a first mover advantage - in terms of multi-channel marketing, digital-product innovations and straight-through claims processing. For this, Mckinsey experts have identified five critical success factors. They are:
- Technologies
- Transformation
- Team
- Timing
- Transparency
To understand them in detail, please read this highly informative article by Sanjay Kaniyar, Peter Peters, and Ulrike Vogelgesang at Mckinsey.com: