How emerging technology can reduce operating costs for insurers

Insurers face the challenge of keeping operations going while reducing costs. That requires implementing new technology while keeping legacy systems running, at least temporarily.

Controlling and reducing costs can give an insurance company a competitive advantage and increase profitability.

In addition, increasing revenues means incurring additional costs, so it is vital to keep product-development costs as low as possible. Balancing cost reduction and growth is the delicate task of every insurance company.

One of the most significant challenges is keeping up with new types of coverage needs. Climate change and other emerging threats mean insurers must be ready to move quickly while keeping costs of innovation down.

Six broad categories can help focus attention on the types of capabilities an individual insurer needs the most to reduce costs. Evaluate each one in light of your company needs, and prioritise your next steps.

Ways new technologies help with operating costs

Strategies to manage and control insurance operating costs overlap or compete for priority treatment. It can be helpful to identify the areas that need attention immediately, then move on to the “nice-to-haves.” The process of digital migration is a marathon, not a sprint, so a savvy balance of short-term and long-term thinking can help organise the process.