Other parts of this series:
Carriers need to understand the forces driving the digital disruption that’s sweeping across their industry so they can prepare their organizations to compete in a fast-changing business environment.
The disruption of the insurance industry is increasing at an unprecedented rate. It’s dramatically reshaping all facets of the industry.
Insurance providers need to move swiftly to understand the powerful forces driving this upheaval. They can then position themselves to compete effectively in a fast-changing business environment. Our recent Technology Vision for Insurance survey found that 86 percent of insurance executives recognize that their organizations need to innovate more quickly to stay ahead of competitors. We’ve entered an era where the advance of technology is no longer linear but exponential.
Four major, interlinked forces are driving disruption:
- Huge advances in the performance and application of digital technology. Innovative digital technology is no longer just providing insurers with greater efficiency and productivity. It’s fundamentally changing how they do business. Improvements in artificial intelligence and the emergence digital ecosystems, for example, are enabling insurers to connect closely with masses of digitally-savvy customers and build strong new ties with diverse new business partners. Seventy-nine percent of the insurance executives we surveyed believe artificial intelligence will revolutionize the way they interact with customers.
- Rising expectations among customers for on-demand, personalized digital services. Google, Apple, Facebook, Amazon and Alibaba are setting the standards for digital services. They’re using artificial intelligence and data analytics to deliver highly personalized offerings that anticipate the needs and preferences of their customers.Consumers are starting to expect similar levels of service from their insurers. Around a third of the insurance executives we surveyed believe that technology that addresses human behavior will feature prominently in the development of new customer experiences during the next three years.
- Growing competition from new entrants to the insurance industry. Digital service providers, insurtech start-ups and large retailers are muscling into the insurance business. Many of them are using innovative digital technology, new business models and cross-industry alliances to deliver attractive products, services and pricing to consumers. Our Global Distribution & Marketing Consumer Survey found that more and more consumers are willing to buy insurance from these newcomers. For example, 30 percent would buy cover from a retailer.
- Major shifts in the way insurance workers are managed and perform their work. On-demand talent platforms and online staff-management solutions are overturning traditional approaches to hiring, developing and rewarding workers. Liquid workforces, which allow employers to quickly assign skilled in-house and contract staff to key projects, offer insurers far greater business agility. Furthermore, intelligent decision-support systems and process automation, are improving substantially workforce efficiency, customer service and product innovation.
Current market conditions are compounding the effects of digital disruption. Low interest rates, regulatory pressures and flat economic growth in most major markets are placing added pressure on insurers to change.
In my next blog post, I’ll discuss how insurers can use digital innovation to transform their businesses and capitalize on the enormous changes taking place in their industry. Until then, take a look at these links. I think you’ll find them very useful.