2014 was a year of challenge and opportunity for insurers with digital disruption necessitating a level of flexibility to effectively compete in today’s fast-paced world. The Digital Insurer Network, an Accenture forum for emerging digital leaders in Europe, Africa and Latin America (EALA), has been established by Accenture to (amongst others) explore this very issue.
Some of the key disruptions that we have witnessed over the past 12 months we consider worthwhile to note are:
- Google spent more on acquisitions than its top 5 rivals combined
- 145 million eBay accounts were compromised in a cyberattack.
- The University of Nevada began discussions with the US military to scan soldiers so that body parts can be 3D printed in case of injury.
- Apple reported a net profit of $18bn -the biggest quarterly profit ever made by a public company.
- Virgin Galactic launched its third supersonic test flight for public space travel.
- Metromile partnered with Uber to provide pay-per-mile car insurance.
- Snapchat was valued at $10bn – transforming the messaging industry in 3 years.
- Telematics and self-driving cars is now a common topic in basically every publication
Bearing all of this in mind it is easy to see how hard it will be for insurers to rely on old operating models and to conduct ‘business as usual’ if they are to flourish – and even survive. Rapid advances in technology are creating a world where everyone and everything is more connected than ever before. By 2020, there will be 4.3 connected devices for every person on the planet; these connected consumers are online one in 12 waking minutes, spend nearly four hours a day on social media and consumes 10,845 words or 34 gigabytes on a typical day.
While one could argue that digitalization is actually on-going since the usage of computers some 50 years ago, the insurance industry faces a period of significant change because current buld of new technology means new considerations. For example, car telematics systems that detect users’ unique driving signatures, and wearable fitness trackers and health monitoring apps, all disrupt the way insurers’ price and underwrite coverage. Advances in social media technology are also impacting the marketing of products and services. “Beacon” technology enables carriers to track customers through their smartphones, while facial recognition software like Quividi assists in creating targeted advertising. Sentiment analysis technology identifies customers’ facial emotions and feelings; “virtual agents” allow customers to connect remotely with experts for personalized service; and the customer dialogue platform, which uses artificial intelligence to generate personalized recommendations, are all examples of trends that can significantly disrupt insurance as we know it.
At the risk of overwhelming you, I also need to mention what is to come, over and above what is already fast unfolding. The connected insurer of the future will need to consider new developments that are defining ecosystems and redefining industries:
- By 2020, 20% of the FTSE 100 will be made up of companies that don’t yet exist.
- The market for consumer and business robotics will be $1.5 billion by 2019 (Business Insider).
- There will be 31.4 million smart home systems in North America by 2017.
- By 2020, there will be 4.3 connected devices for every person on the planet (Strategy Analytics, 2014).
And the pace of digital disruption shows no sign of slowing, so while these changes present big opportunities for insurers, they must be balanced with a human-centric approach to prevent misuse and misunderstanding. They also require insurers to be well positioned to tap into the market—in many cases, rethinking the tried-and-true systems that have worked in the past. As new ecosystems are being established (just note that disruption is basically hitting every industry and thus every industry player is trying to find its new home) insurance companies must re-define their roles in such collaborative systems and we will spend some time in our next Digital Insurer Network meeting on discussing the impacts on distribution and management of agent networks.
To remain competitive, you need to constantly ask: what could the future insurance industry look like and how do you lead the way?
Please watch a video that was developed for the Digital Insurer network meeting and vividly illustrates many of the digital trends I have shared here.
In addition if you are interested in learning more about Digital Insurer Network, please contact us at firstname.lastname@example.org