Insurers see legacy software as the greatest hurdle to developing their digital strategy, a new study has revealed.

The research from IT market and analysis firm PAC was based on interviews with senior IT and business executives at 200 insurance companies. It found that ageing applications were considered a bigger threat to their digital strategy than budget constraints or perceived data and security issues.

Other results from the report, Digital Transformation & the Legacy Challenge, saw 63 per cent of insurers name ‘increased customer acquisition’ as a primary goal for their digital strategy, while 61 per cent cited ‘improved operating efficiency’ as a key target.

Some 42 per cent of respondents believed that physical branches would become less strategically important in the next five years, while 66 per cent said that the mobile channel would become more significant. Over half also saw social media networks as rising in importance.

Seven out of ten insurers believed that data analytics provided high business value in the area of risk calculation, ahead of customer management (55 per cent) and fraud management (45 per cent).

Nearly all (94 per cent) of respondents stated that IT services providers would play an important role in assisting their digital journey, which represented a higher level than digital agencies (74 per cent) and cloud providers (69 per cent).

Nick Mayes, principal analyst at PAC, said: “Insurance companies have been historically cautious in implementing major changes to both their IT landscapes and core business processes. But the current wave of M&A activity among European insurers presents a great opportunity for them to use the consolidation process as a platform for real digital innovation.”

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