Economic concerns keep customer experience at top of insurers' priorities

Improving the customer experience continues to matter most to insurers thinking about technology spending in 2023, according to the latest annual Gartner CIO and Technology Executive Survey. The survey of 2,203 executives includes 91 from the insurance industry.

Kimberly Harris-Ferrante, distinguished vice president analyst, Gartner

“Customer and user experience has been number one for a couple years,” said Kimberly Harris-Ferrante, distinguished VP analyst at Gartner, who spoke about the survey’s insurance executive responses. The difference with this year’s survey results is the economic forecast, she added.

“Revenue and growth has been higher in previous years, but because of the economic situation – the recession, financial crisis in the financial industry – it’s not a surprise that customer experience is still high on the list,” Harris-Ferrante said.

Gartner’s survey ranked functions where insurance technology executives are increasing spending. The top items were:

Application modernization – 68%Cybersecurity/information security – 67%Business intelligence/data analytics – 64%Integration technologies and APIs – 61%

Application modernization is closely tied to improving the customer experience, Harris-Ferrante said.
“They’re focusing a lot more on application modernization, the foundational technology, foundational strategies 101 – cleaning up shop when it comes to getting rid of legacy systems and getting rid of legacy assets,” she said.

If insurers only invest in front office technologies, that may not be enough to meet consumers’ expectations, she added. “We’re researching autonomous processing for claims,” she said. “You have to have more responsive and open insurance systems – API-based systems. If you have legacy systems that are not capable of doing that, you can only go but so fast, only improve customer experience but so much and only manage your IT debt but so much. These overarching problems continue to escalate.”

Gartner’s survey report advised insurers to collect more customer data, including behaviors and preferences, to support personalized, dynamic business strategies that increase customer engagement. A majority of insurance CIOs surveyed said they were behind on meeting the value expectations they have for operational technology, including customer experience improvements. 

At the same time, the effects of COVID have continued to ripple through the insurance market, according to Harris-Ferrante. “Life insurance companies realized during COVID that they need to sell more online and their processes need to be faster,” she said, giving an example of someone concerned about having COVID suddenly wanting life insurance but in the time it took for an insurer to respond to an application, they lost interest.

“Insurers realized they need to shrink the cycle time so that they can answer needs of customers in a more timely manner,” she said. “That requires a lot of changes in these back office systems. Insurers had a bolt of reality during COVID that some of the traditional processes, traditional processing times, and even traditional products are not necessarily going to be suitable in the future. This is a good time to look at core systems and legacy applications to determine if they’re suitable for forward-looking digital customers.”