Other parts of this series:
Advances in artificial intelligence, analytics and the Internet of Things are creating a host of opportunities for insurance providers.
Rapid digital innovation is creating huge opportunities for insurers to reach more customers, create new products and build lucrative markets. Some carriers will struggle to cope with the far-reaching changes wrought by advances in digital technology. However, insurance providers that are swift, agile and forward-looking can capitalize on this upheaval.
Three digital technologies are at the forefront of much of this disruption: artificial intelligence (AI), analytics and the Internet of Things (IoT). Their impact is being felt throughout the industry’s value chain. Marketing, sales, product development, underwriting, policy administration and claims are all undergoing substantial change. The extent of this disruption will, of course, vary from company to company. Many auto insurers, for example, have already had to change their business models because advances in digital technology have slashed distribution costs and accelerated service response times in their markets.
One of the most significant aspects of the current wave of digital transformation is that much emerging technology is being tailored to the needs and wishes of people. Previously, people had to adjust to the requirements of technology.
We’ve identified five ways this “people-first” digital technology is likely to impact the insurance industry.
- AI will become a crucial component of insurers’ interfaces with customers, brokers, workers and business partners. It will help them deliver a host of simple but powerful services and experiences. Our Technology Vision for Insurance survey found that 79 percent of executives believe AI will revolutionize how their firms source information and interact with customers.
- Digital ecosystems will be potent business platforms for quick-moving insurers. Around three-quarters of the insurers we canvassed recognize that partners and ecosystems will help determine their competitiveness.
- By becoming “on-demand” enterprises, with highly-liquid workforces, insurers will be able to achieve the rapid innovation and sudden organizational shifts vital to successful digital businesses. Among the insurance executives surveyed, 62 percent expect their organizations to increase their use of freelance workers by more than 25 percent next year.
- Progressive insurers will use intelligent digital technology to upgrade their personalized relationships with customers to long-term intimate and lucrative partnerships. Most of the insurance executives we surveyed believe that companies that draw on insights into human behavior to design intuitive and predictive customer experiences will outstrip their competitors.
- Farsighted carriers that work with government agencies, regulators and competitors to devise technology standards and codes of conduct to meet the changing demands of the digital economy will take the lead in building ecosystem businesses. More than 60 percent of insurance executives believe their regulatory environment is outdated.
By embracing one or more of these trends, innovative carriers will be well placed to seize some of the many opportunities emerging from widespread digital disruption.
In my next blog post, I’ll discuss some of the major insurers that are already deploying digital technology to broaden their businesses and grow new sources of revenue. Until then, these links will provide you with substantial insight into the changes in the insurance industry: