The future may be hard to predict, but need not be hard to prepare for. Insurers are grappling with thetough new business, investment and regulatory environments that are emerging from the financial crisis.The industry, however, also faces far broader challenges. Demographic shifts, the rise in power of theemerging markets and changing customer behavior will all help shape the sector's longer-term future.

Digital technology is a global megatrend which is transforming a variety of industries that includes the insurance sector. Insurance sector has been a bit slow to IT adoption due to rapid changes in technology and because their distribution channels are still conservative, i.e., handled by agents and brokers and were in fact not ready to adopt new technology. However, digital technologies adoption by customers that include social media, smart phones, electronic transactions, etc., enabled by cloud service models, e-commerce and mobility are making an impact on the technical and commercial capabilities for many insurance companies. Insurers are quick to capitalize on this trend.

The factors that we believe bringing these changes can be categories in:

Social: The balance of power isshifting towards customers.

Technological: Advances in softwareand hardware that transform 'bigdata' into actionable insights.

Environmental: The rise ofmore sophisticated risk modelsand risk transfer to address theincreasing severity and frequency ofcatastrophic events.

Economic: The rise of economic andpolitical power in emerging markets.

Political:Harmonisation,standardisation and globalization of the insurance market.

Key business drivers for IT adoption in insurance:

Engaging customers using multi-channels of customer interaction and include all age segments
Devise strategies to include the growing investments in internet and mobile channel strategies for faster and instant communication
Collaborate with partners to launch innovative products in areas such as micro-finance, wealth management, etc.
Automate underwriting processes using data analytics and business intelligence (BI) and predict real time fraud analysis, risk analysis
Leverage Bancassurance banking systems and regulations available in each country to explore cross-selling of insurance products, particularly in emerging markets like India
While 63% of insurance businesses report that they are ready to move towards more digital practices, only 23% of these businesses are ready, reports a joint Forrester and Accenture study. To accelerate this process and ensure successful transition to digital workflows, there are a few key areas we can expect insurers to embrace as they seek to create more automated, user-friendly processes.

Embracing a cloud-based and on-premise infrastructure
Just two years ago, 84% of companies were operating in the cloud and more than half of these companies reported that the cloud reduced the amount of work from IT teams, says PC World. Still, IT teams in the insurance sector struggled with what information is allowed by regulators to be stored via cloud vs. on-premise. To add to this, the proliferation of legacy technology is challenging the cloud-based-only approach. Many insurance entities are running off 40-year old administration technology designed to manage the claims process, says a recentTrustMarque report. This kind of technology is hindering innovation, but insurance agents are far from instantaneously replacing such mainframe technology.

This year, as the insurance sector adopts a more streamlined workflow, we can expect a significant increase in the use of technology that can be operated via hybrid cloud and on-premise, ensuring ultimate flexibility for customers and clients and strong adherence to the ever-changing government regulations within the insurance environment.

Automating business processes where necessary
The key to moving toward a more digital environment and improving customer service is to automate workflows where necessary. With the excessive use of social media on the rise, and on multiple channels, customers expect ultimate interaction and personalization from their insurance agents and brokers.

While standard face-to-face interaction may be less common between insurance entities and their clients, relationships are still just as important, if not more important than in the past. As such, insurance agents need more time to interact with their customers and less time sorting papers, scrolling through documents and staying on top of processing claims.

Choosing programs and systems with customers in mind
A Forrester-Accenture report recently dubbed this year the "age of the customer," where the customer experience is at the heart of the digital movement. This means that technologies and new digital processes can't be implemented with an administration-first mind set.

Take for example, something as simple as a digital application. While some technology may truly require three different phone numbers or two different emails from the client, how convenient is that for the customer filling out the application? Today's customers expect a seamless, intelligent process from insurance businesses. While this may signal some disruption to internal processes for the agent, the end result must be to make programs easier to use for the customer, not merely just the IT team.

Social media analysis
Insurers are turning to social do it yourself car wash media as a marketing medium and a platform for collaboration. Social media is widely used for networking with friends and business partners. The usage of social media is made easy by smart phones and mobile devices. Insurers are able to target new customers based on their life events and also use social media networks to communicate with internal and external stakeholders.

Focus on SaaS solutions
Insurance companies are deploying applications by adopting SaaS solutions because it offers superior infrastructure, high levels of security and low risk. Insurance companies have the advantage of access to latest infrastructure and IT platforms at low cost. SaaS offers a perfect solution for insurance to improve their efficiency at minimal capital costs.

Real time architectures for agility
Real time data sources are mobile technologies and social media which can be leveraged by insurance companies to become more competitive. Capturing real time data from online channels is proving a gold mine for insurance companies because they provide insights on customer behavior based on which insurance products are strategized. Insurance companies are deploying data analytics tools, BI platforms and data visualization tools to derive full benefits of real time data.

Data analytics and big data
The ability to capture real time data, big data and analytics play an important role for insurers in terms of potential customers. The recent trend is the adoption of sensor technologies named telematics used to monitor driving behaviors of the individual. These technologies help insurance companies to provide usage-based insurance policies.