BCG: Digital underinvestment hurts insurers

Executive summary :

Most insurers are underinvesting in digital initiatives and are steadily falling behind the industry’s “digital champions”—companies prioritising those investments and building digital organisations.

Digital champions are leaving their competitors behind

Insurers can reap ROI rewards – and fast

For years, uncertainty about how to digitise, the associated costs, and the return on investment have held back many insurers from taking bold steps. But recent Boston Consulting Group research found that digital investments pay off quickly for insurers, across vital business metrics of revenue, cost, and customer satisfaction.

Digital champions outperform peers

Among global industries, insurance is one of the least digitally mature, making it a tempting target for disruption. Among the 1,800 companies across nine industries that BCG surveyed in 2019 for the annual Digital Acceleration Index (DAI)—a tool to measure companies’ digital maturity—insurance scored an average of 47 out of 100.

That score was 14.5% below the financial institutions industry which, along with the technology industry, led other industries with an average DAI score of 55. (see exhibit 1)

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