The digital-physical blur gives insurers the potential to seize the initiative, and become disruptors rather than the disrupted.
The potential inherent in contextual, real-time data is really quite mind-blowing. To grasp this potential, however, one needs to look beyond vehicle telematics to consider the way in which sensors are proliferating in our homes, factories and even the environment—smart power grids are already a reality, as are CCTV cameras in high-risk areas. Before too long, machinery of all kinds will be connected.
And, one could argue, the mobile devices with which we have all fallen in love are themselves becoming sensors of a kind: sensors used by us to understand and respond to our environment, but also sources of information about us.
The key point I want to make here is that this information can help insurers become disruptors rather than endlessly having to cope with disruption. In the past, it seems, disruptive innovation has tended to come from outside the industry core—one thinks here of aggregators and direct insurance—and insurers have had to adapt. With this kind of data to hand, insurers will finally have the chance to take the driving seat (or not, in the case of the driverless car) and help determine the way the industry evolves.
To do so, certainly, they will have to look at existing business models more critically, and spend time looking at what innovators in other industry sectors are doing… and how those innovations might be applied in insurance.
Achieving all this, one must add, will require insurers to take a long, hard look at themselves as innovators in the field of data. While insurers are already big users of data, they typically tend to see it in the context of risk management/. Now they need to create a culture of data innovation focused more broadly to include customer relationships and business partnerships.
Contrary to popular opinion, innovation is something that can (and should) be managed. Chances are that many insurers are not doing so yet. Some strategies we have seen clients adopt in this regard include integrating data into existing innovation labs, or creating a data innovation center of excellence. Creating a culture of data innovation is the ultimate goal, and a dedicated central organizational structure can be an excellent catalyst.
Next time, let’s look at some challenges insurers face—and who their allies might be.
Explore the six technology trends set to shape the future of insurance, From digital wallflower to digital disruptor.