Insurance Blog | Accenture

Life insurance CIOs are well positioned to help business leaders find opportunity amidst industry dynamics. According to Accenture Research, these include Millennials who are at the age where life-stage buying traditionally occurs, Baby Boomers who are entering retirement en masse — many of whom are unprepared — and $30 trillion in financial and non-financial assets that will transfer between generations in the next decade. Insurance CIOs can help business leaders shape their organizational strategies and guide technology investment in the areas that drive the most business value. Accenture Research points to five trends that are driving technology investments:

Trend 1 – Rise of direct distribution

Agency distribution is shifting focus to the affluent market, leaving the individual market ripe for new entrants and established insurance carriers. A key enabler for success is a digital distribution strategy and intelligent technology to attract new customers and retain existing customers in between policy issuance and claims payout. While direct-to-consumer sales have risen 29 percent in recent years, they still represent less than 10 percent of total sales — and a large opportunity for life insurers.  (Source: Conning study, 2016 Life-Annuity Insurance Consumer Markets Annual)

Trend 2 – Shift to simple modular insurance products

With service becoming a key differentiator among providers, particularly those with direct online offerings, products that are the least complex to understand and easiest to purchase will be the most successful. Carriers must modernize and/or completely replace their legacy systems with PAS technology that can build, test and launch new products rapidly and profitably. They must operate as “frictionless businesses,” enabling ecosystem partnerships that scale quickly and broadly, applying personalization and automation to operate more efficiently, and providing consumer experiences like those of Google, Amazon, Facebook and Apple (GAFA).

Trend 3 – Era of customer hyper-relevance

We are entering the era of customer hyper-relevance. Insurers, competing for individual consumers accustomed to the user experiences and personalized offerings of GAFA, must provide relevant and deep personalization – “one size fits me” – and human-digital interaction. Platform-based competition will become the norm, whether the platform is ALIP or some other insurer technology platform, GAFA, or any other ecosystem.

Trend 4 – Data analytics and intelligent businesses

This trend is the enabler of hyper-relevance, discussed above. Insurers need to monetize their data to deliver new opportunities for top line growth and efficiencies that improve the bottom line. Cheaper data storage and compute power that’s virtually unlimited and getting less expensive by the day are advancing AI at an accelerated pace. AI, including machine learning, natural language processing and deep learning combined with automation, will deliver more predictive insights and personalized products and services, add greater value and redefine how insurance enterprises function.

Trend 5 – Digitalization of the service experience

Insurers are simplifying their core processes and systems, and integrating data from multiple businesses to deliver exceptional service and operating efficiency. They’re connecting data from multiple systems of record and systems of engagement, irrespective of line of business or entity, to build personas that represent every individual / organization. This enables insurers and advisors to grow their businesses through personalized, products and services. Digitalization also makes it easy to conduct transactions and maintain customer relationships.

Insurance CIOs are at a technology turning point. Cloud and microservices are two technologies helping them capitalize on these trends to drive business today and well into the future. Read more in my previous post “Core Insurance Systems in the Cloud: New approach eases cloud transition for insurers.”

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