In nearly every industry, the biggest companies are taking the lead in the digital game. L’Oréal, Tesco, BMW, Unilever, Nestlé and GE are just a few examples of Global 2,000 companies that are racing to become digital. Those that get there first will disrupt their existing markets and penetrate new ones.
But what of insurance, an industry that has been somewhat slower in its adoption of digital technologies? I am of the view that large insurers—despite the regulatory barriers they face and their conservative internal cultures—are just as well positioned to become digital disrupters as their peers in sectors such as retail, banking and telecommunications.
As I argued in a recent blog post, insurers have a number of advantages when undertaking a digital transformation. Just as a start, they have strong balance sheets and they are already integrated into established ecosystems. The challenge is leveraging these strengths in a nimble way so that they disrupt their existing markets and uncover opportunities in industries and customer segments where they have not traditionally competed.
It is imperative that insurers ride this digital wave—not just because of the opportunity cost of not doing so, but also because of the way that a range of emerging technologies could undermine the traditional insurance business model at its foundation. These trends—which are being woven into the next generation of business strategies across every industry—are the subject of the Accenture Technology Vision 2014 for Insurance.
The Technology Vision outlines six key trends that are shaping the digital future of insurance:
- Digital–physical blur: Extending intelligence to the edge
- From workforce to crowdsource: Rise of the borderless enterprise
- Data supply chain: Putting information into circulation
- Harnessing hyperscale: Hardware is back (and never really went away)
- Architecting resilience: Built to survive failure
- Business of applications: Software as a core competency in the digital world
Insurers cannot ignore the ramifications that these disruptive trends will have for their businesses. Sure, digital disruption in our industry may not be swift and as merciless as it has been in media or retail, but insurers that do not embrace the digital imperative face a sure erosion of their market power, market share and profitability.
It is our contention that every insurer that wants to remain profitable and relevant in future must become a digital insurer. In the next few posts, I’ll outline where the industry is ripe for digital disruption and how insurers can turn this reality into an opportunity rather than a threat. I will also delve into what each of the trends identified in the report mean for insurance carriers.
In the meantime, if you’d like to read the full report, you can download it here.