Digitalization of Insurance Sector: Issues and Challenges in Western Balkan States
Digitalization of Insurance Sector: Issues and Challenges in Western Balkan States

Author(s): Armanda Tola
Subject(s): Social Sciences
Published by: Udruženje ekonomista i menadžera Balkana
Summary/Abstract: The digital transformation has increased its relevance for insurance companies in recent years, as one of the main drivers of insurance market development. As with any revolution, it comes with opportunities and challenges, especially for the information technology departments to increase the effectiveness of business processes. This paper aims to provide a comprehensive overview of digital technologies and their capacity implemented in the insurance industry in some of the Western Balkan states Albania, Kosovo*, and North Macedonia. The data was collected from a survey initiated by Deloitte in Poland called “Insurtech 2022 Survey” which was distributed to some selected Central European states, to identify industry trends and examine the needs of insurers and capabilities of Insurtech companies. This study uses results from primary data gathered from this survey which was delivered to all non-life insurance companies in Albania, Kosovo*, and North Macedonia and was answered by more than 70% of them. The aim was to examine the industry trends and determine both the needs of insurers and the capabilities of the insurance industry. The paper discusses Insurtech tools implemented in these business processes, evaluates the effectiveness of their use, and identifies the associated risks. The conclusion revealed that North Macedonia has spent and plans to spend more than the other is the most significant study with Insurtech companies, in positive line with the volumes of gross annual premiums. The paper also discusses Insurtech tools implemented in non-life insurance companies, assesses the effectiveness of their use, and identifies the associated risks. The results illustrate three major tasks the industry is facing: the risk of unauthorized access or cybersecurity is the most significant risk according to the respondents, followed by the challenges of improving the customer experience, and business processes, offering new products, and preparing for competition with other industries. Moreover, key areas of adaptation according to this study are identified such as the effect of information asymmetry and risk assessment, and the implications of new technologies. The results emphasize the importance of a holistic digital strategy to be implemented in the future in all these states.

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