Legacy systems are posing a significant challenge to innovation in Singapore’s insurance sector, as per a recent global survey conducted by EPAM Systems, a software engineering firm. The survey, which included 200 insurance executives from different regions, including Singapore, sheds light on the industry’s struggle to modernize amidst reliance on outdated technology.
The findings underscore the industry’s traditional dependence on older systems for core operations, which are now proving to be inadequate for meeting the demands of contemporary business practices. With mounting pressure to deliver greater value to clients, shareholders, and employees, insurers are grappling with the limitations imposed by legacy technology.
According to the survey, outdated technology infrastructure emerges as the primary obstacle hindering the adoption of new digital tools and methodologies. A substantial 45% of companies identify legacy systems as a major impediment, with an additional 39% acknowledging that these systems are slowing down innovation and change, while 34% report hindrances in the swift introduction of new products.
The advent of new technologies, however, presents opportunities for advancement within the industry. Recent technological strides, particularly in data solutions and artificial intelligence (AI), are seen as pivotal drivers of transformation. Nearly 60% of respondents recognize the significant impact of AI developments on their operations, with one-third predicting AI and machine learning to be the most influential technologies in the next five years.
Despite the acknowledgment of the importance of technological innovation at the executive level, the insurance sector in Singapore remains cautious in its investment approach. Factors such as a risk-averse culture, lack of urgent change drivers, and strained relationships between business and IT departments contribute to this hesitancy.
Nevertheless, Singapore’s insurance market stands out for its digital advancement compared to other regions, driven by several key factors. Progressive regulation, spearheaded by initiatives like Project MindForge by the Monetary Authority of Singapore (MAS), promotes the responsible use of AI to bolster industry resilience. Many Singaporean insurers have already integrated AI into core functions such as underwriting and claims, yielding efficiencies across the insurance value chain.
Moreover, the widespread utilization of digital identity, exemplified by the use of SingPass for secure digital transactions, reflects high levels of digital engagement among Singaporeans. The collaborative ecosystem further fuels digital transformation through partnerships between technology platforms, service companies, and government-sponsored events.
Raphael Wong, regional managing director and head of financial services APAC at EPAM, lauds Singapore’s leadership in digital innovation, attributing it to robust government and regulatory support, a culture of innovation, and a collaborative industry approach. Wong emphasizes Singapore’s unique attributes, including digital leadership, innovation culture, adoption of digital tools, partnering attitude, and overall speed to market, setting it apart from other markets in the APAC region.
