Insurers are struggling to seize opportunities arising from the growing digital economy, according to a report by KPMG.

Management buy-in, legacy systems, expertise, costs and challenges related to effective data use are among barriers, global research reveals.

“Our research shows the industry recognises the imperative of reinventing operating models to respond to and capitalise on digital technologies,” KPMG Australia Head of Insurance Richard Marrison said.

“But it also shows insurers are struggling to develop digital strategies that align with their business objectives and to resolve legacy business processes and supporting IT infrastructure.”

The report – Transforming Insurance: Securing Competitive Advantage – says 69% of respondents have a digital strategy beyond a website, but only 37% say digital initiatives are fully aligned to their company’s strategic objectives.

Mr Marrison says digital advances, social networks and an exponential increase in external data sources are adding complexity while also offering opportunities.

“Many Australian insurers, which have traditionally distributed through intermediaries, are looking for additional and complementary ways to distribute products either directly to consumers or via white-label arrangements,” he said.

They are also focused on using technology and data to produce tailor-made consumer offers, he says.

The KPMG report says 82% of respondents plan to use digital technology to improve customer relationships over the next three years, while 65% will use it to manage risk.

About 61% will use technology to develop new products or services, compared with 43% during the past three years.