Insurance Blog | Accenture    

Is there a digital insurance gap? Recent work from Accenture Research suggests that there is.

Using a combination of qualitative research, economic modelling and a survey of 4,300 global executives, my colleagues found that digital leaders across industries—including insurance—are growing five times faster than digital laggards.

But the research also found that we’re not in a “digital winners take all” situation (yet, at least). Some organizations have jumped the digital gap and broken previous performance barriers. We call these “Leapfroggers.”

We’ve previously discussed how insurers can become Leapfroggers within claims. Today we’re going to shift focus and look at actuaries.

There’s no doubt that actuaries today face a shifting and complex landscape. While the digital age has changed every part of insurance, no one in the industry has seen bigger change than actuaries. The amount of new data and information they must integrate into their work is nothing less than revolutionary.

Below are some of the biggest changes shaping the actuarial functions in the industry.

Business model changes


Many insurtech partnerships have evolved to enable the scaling of the business for new products. These hybrid business models not only act as a channel to penetrate new markets but also help the legacy carrier by enhancing their technical capabilities and testing out new products or processes before investing and bringing them in-house.

Product offerings

The growing popularity of embedded insurance, with its unique covers designed to enhance the customer journey, means that insurers now need to reduce the complexities of pricing. The cost-plus-profit method is currently the most common practice. This lends itself to easier industry benchmarking for services provided, and hyper-personalization replacing cost as the difference-maker for the consumer.

Data source and device innovation

There is an ever-growing number of data sources that capture risk and give insight into customer behavior. These include financial/demographic mosaics and third-party data. Some of these physical devices like wearables, telematics and Internet of Things (IoT) devices, not only act as data sources but also change the way partnerships are created.

The influx of real-time data opens the door to true usage-based insurance. The classic example here is auto insurance. If actuaries can track where, when, and how fast an automobile is being driven, their measurement of risk becomes much more detailed.

But there are many other use cases for real-time data like this. A vacation home, for instance, could be covered by usage-based insurance that only turns on when the IoT devices that run it detect that someone is living there. Specialized, expensive equipment—say, a super-heavy duty crane that a construction company only uses a few times per year—could be covered only when it is actually in use.

Even these examples are not totally new, though. The most exciting applications of this kind of data, to me, are some of the least considered. If actuaries had access to real-time sales data from a retailer, why couldn’t they offer usage-based commercial insurance? Likewise, life insurance policies mostly have a 30-year horizon today. But life insurance actuaries have secure access to a customer’s health data through, say, their Apple Watch, why couldn’t the policy be adjusted in real-time?

Uses of digital data like this are closer than we think in many cases. And when it does, it will be actuaries who connect the data to the policies.

In my next post in this series, we’ll look at becoming a Leapfrogger in the world of underwriting.

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Disclaimer: This content is provided for general information purposes and is not intended to be used in place of consultation with our professional advisors.