A study published this week has found that only 18 percent of motor insurers believe that the industry is capable of responding to digital risks.
The study, conducted by LexisNexis Risk Solutions, asked a range of UK motor insurers about the types of risks they believe to be the most challenging.
As well as the respondents feeling that the industry isn’t prepared to tackle digital risks, only 14 percent of them believe that their organization can respond to them.
These findings follow a similar report released recently by the same department at LexisNexis, which suggests that the UK insurance market needs to become better at adopting digital technologies or it will fall behind other countries.
When asked about which risks they believe are the most challenging, 35 percent cited email security and data protection. Identify theft followed, along with cyber crime at 27 percent.
Meanwhile, 26 percent of insurers said social networking is a problem, with 16 percent of them saying that malware spread is a challenging issue.
These responses, according to LexisNexis, reflect the high volume of online transactions and the growing threat of fraud happening in the market.
As a result, there are industry concerns over the protection of personal and behavioral data due to the rise of connected technology. Transparency and good data management techniques, it is felt, are crucial.
In other findings, 89 percent of personal motor insurers included in the study see emerging technology and digitization as major challenges.
Forty-two percent have already experienced operational challenges; 40 percent have come across price competition; and 40 percent have found data protection to be a struggle.
Action is needed
Worryingly, though, more than a quarter of insurers (26 percent) haven’t confronted these issues. Action needs to be taken, or these risks could become more complex.
Selim Cavanagh, vice president of insurance UK and Ireland at LexisNexis Risk Solutions, said that while there are challenges, technology can help insurers tackle them.
“The motor insurance market is undergoing major changes and challenges – not least from agile instech [or insurtech] start-ups that are seizing the digital advantage over more traditional operating models,” he said.
“Advances in data analytics are enabling insurers to understand and segment customers more effectively and make more informed risk decisions. It’s clear that the opportunities through digitization are huge and now is the time to set in place robust strategies to deal with the emerging digital risks.
He added: “Overall, the report has highlighted the importance of planning for digital risk and the need to ensure that future offerings are robust and agile enough to deal with a range of threats if or when they strike.”