The insurance industry is set to be reshaped by 5 digital trends, research by Accenture shows. For insurance companies to profit from the digitalisation, only adopting digital technologies will not be enough. According to the firm, insurance companies should embrace the 5 trends to connect customers, partners, employees, and industries to expand their value creation and growth.
Professional services firm Accenture recently released its ‘Accenture Technology Vision for Insurance 2015 - Digital Insurance Era: Stretch Your Boundaries’ report, in which it discusses the trends shaping the digital insurance business of tomorrow, creating a competitive advantage for the digital leaders. The report is based on a survey of 221 executives from insurance companies across the world.
According to the consulting firm, a new ‘we economy’ is redefining to the insurance industry “whether carriers are ready for it or not”, with 75% respondents believing that the industry boundaries will dramatically blur in the future as platforms reshape industries into interconnected ecosystems.
Accenture emphasises that the insurance providers that embrace this collaborative new economy have the chance to profit from the digitalisation of the industry, placing them on a path of higher growth for the future. To incorporate digital in their business, 35% is investing in digital as an overall business strategy, while 29% is investing in selected business units. In addition, almost two out of three (64%) insurers plan to engage with new digital partners within and 45% with partners outside the insurance industry.
The report highlights 5 trends that, according to Accenture, will catalyse the growth and transformation of the insurance industry’s digital power brokers in the next three to five years.
The Internet of Me: Our world, personalised
The first trend focuses on the personalisation of customer experiences, which is set to change the way people are interacting through technology. 73% of the respondents indicate that providing personalised customer experiences is a top three priority and 50% have already seen a positive return from their investment in personalised technologies.
Outcome Economy: Hardware producing hard results
With more and more intelligent hardware, sensors and devices, a shift is set into motion from selling products to selling results, resulting in a so-called ‘Outcome Economy’. Innovations that insurers believe to have a high or very high impact on their organisation are smart objects such as appliances and robots (named by 67%), wearable technologies (63%) and connected cars (60%). Of the respondents, 22% have already developed these strategies and/or products and 37% are working on these strategies and/or products.
“While insurers have traditionally based their underwriting and pricing processes on a limited view of certain customer variables, emerging technologies such as wearables and other connected devices can help insurers break from their traditional business models and provide outcome-based services for their customers,” explains John Cusano, Senior Managing Director of Accenture’s global Insurance practice.
The Platform (R)evolution: Defining ecosystems, redefining industries
More than three-quarters (77%) of insurers believe that digital platforms are becoming the preferred tool for building next-generation products and services and more than half (51%) plan to partner with digital technology and cloud platform leaders in the coming two years to deliver better outcomes to partners and customers.
“Platform-based ecosystems are the new plane of competition emerging as part of the ‘platform (r)evolution’ that’s taking hold, and insurers that create meaningful ecosystems with the right partners will be best-placed to thrive in the future,” says Cusano. “Insurers will have to decide, in short order, whether to create their own platform ecosystem, partner to develop a new platform ecosystem, or join one or more established ecosystems.”
Intelligent Enterprise: Huge data, smarter systems—better business
The ‘Intelligent Enterprise’, in which software intelligence is embedded into every aspect of the business, is making machines smarter, allowing them to help insurers to get more value out of the scale of information in big data. Almost half of respondents (44%) believe the data they manage has grown by 50% or more in the past year. Managing these increasing amounts of data prove to be difficult for many, with 56% of insurers saying that managing data is ‘extremely’ or ‘very’ challenging, considering changes in its volume, variety and velocity.
Workforce Reimagined: Collaboration at the intersection of humans and machines
The workforce reimagined trend relates to natural human interfaces, wearable devices and smart machines extending intelligent technology to interact as a ‘team member’. Two-thirds (66%) of respondents indicate to experiment with intelligence technology, while three-quarters (76%) believe that successful businesses will soon manage employees alongside intelligent machines and 74% say companies will need to train their machines as much as employees in the future.
The report concludes: “Becoming a digital insurer is no longer simply about incorporating digital technologies into an organisation. It’s about using them to create a broader fabric that connects customers, partners, employees, and industries, and enables new insurance value propositions that expand value creation and growth.”