Other parts of this series:
The expanding powers of technology are sowing the seeds of a revolution in the insurance industry. AI is coming into its own and will soon make every interface simple and smart. Workforce marketplace tools are giving insurers new ways of managing talent—just in time to avert an impending skills crisis. New partnerships and blurring industry boundaries are unlocking ecosystem powerplays.
Each of these trends, described in Accenture’s 2017 Technology Vision for Insurance, will have major implications for the insurance industry. But the most important trend of all might be the result of a tech milestone that passed unnoticed to many.
There is always a gap between a tool and humans getting use out of the tool. A car is only useful if you know how to drive. A laptop is only useful if you know how to operate a computer. A camera is only useful if you know a little bit about photography (and how to remove the lens cap). It always falls to people to bridge this gap, because tools cannot learn and adapt.
AI, machine learning, the internet of things, intelligent automation and similar tech trends passed an inflection point in the last few years. Our tools are now able to learn from us. The gap between effective human and machine cooperation is rapidly shrinking. Combined with the snowballing quantities of data now continually amassing around each customer, these smart tools will give firms the chance to build products and services that account for individual behavior on a new level. Everything in insurance is about to become bespoke.
We call this trend “design for humans.” It will have major implications for many industries—insurance more than most.
A huge leap forward
Our research indicates that insurers are aware of the tremendous opportunity this technological sea-change represents. Strong majorities of surveyed insurance executives agree that insurers that best understand the minds of their customers will gain a competitive advantage.
Insurers already have masses of data they can turn to for insight into how people think, what they want and how they react. They can move beyond simple personalization techniques to provide true “living services” that account for each individual customer’s goals and behaviors. But this is just the beginning.
Insurers will soon be able to shift from pooling and pricing risk based only on historical data to automatically assessing and pricing it in real time for each individual. Before long they will be able to provide customers with much more than insurance. Real-time services and risk management solutions tailored to each customer’s goals and driven by adaptive technologies can transform the traditional insurance-customer relationship into a true partnership.
The early phases of this evolution are already visible in auto insurance, where many carriers use vehicle telematics data to adjust premiums to reflect each customer’s actual driving instead of their history and the history of similar drivers. Popular products include “pay as you drive,” which lowers premiums for people who don’t log many miles in a car, or “pay how you drive,” which accounts for behaviors like speeding and sharp barking.
Many auto insurers are looking into the next logical step: “manage how you drive,” where insurers provide personalized advice to customers to improve their driving habits. It is easy to imagine “design for humans” pay-as-you-go insurance available in a few years. This would use smart sensors to detect when an insurable asset is in use and then price and place coverage based on factors like the time of day, location, the customer’s claims record and the real-time status of the asset. Insurers could also eaily partner with a company like Mobileye, which provides a collision avoidance solution, to use a vision sensor to keep an eye on the road and warn drivers of danger.
Similar trends are visible in other segments of the insurance industry. Silicon Valley startup Trōv has developed a lifestyle app that provides on-demand consumer electronics insurance. Customers can insure single possessions with precision down to the cent and the second, all on their smartphones. The app is available in Australia and the United Kingdom and will come to the United States later this year.
Home insurers like USAA and American Family are using connected home technologies to personalize the premiums they charge and help customers avoid needing to make a claim in the first place. Homeowners should soon be incentivized for good habits like switching the alarm on, locking their doors and turning the stove off when they leave the house. They could receive alerts about rising moisture levels that might indicate a burst pipe, or a heads-up if a child or elderly loved one has not returned home by a certain time.
Aviva, in partnership with HomeServe, an emergency repair company, today pays UK customers to have a sensor installed on their incoming water pipes to detect tiny leaks. HomeServe repairs the leaks before the pipe floods the home and causes serious damage.
Life insurers can now help clients take proactive steps to reduce health risk. LocalTapiola’s SmartLife product combines fitness tracking, health coaching and financial cover to help people lead healthier lives. More than 80 percent of participants report it has helped them improve their lifestyle.
Commercial insurers can also leverage customer data to provide variable premiums or customized risk management services. The Hartford Steam and Boiler Inspection and Insurance Company, which is part of Munich Re, has developed an internet of things turnkey service for insurers that uses sensor technology to remotely monitor commercial facilities. In a trial with Church Mutual Insurance Company, the service saved customers over $500,000 in damages.
Preparing for a quantum leap
Examples like these suggest that the primary role of insurers is changing. They no longer exist to drive people toward their services. Instead, they partner with customers to reduce risks and improve outcomes in every corner of their lives.
But the experiments described above are just the start. To reach the next level, insurers will need to make deep changes to their business model. An experimental and scalable approach to innovation will be a must-have. Insurers must also make abiding commitments to transparency as they apply private data to each customer’s life.
Making this transition will likely have its ups and downs.We predict that:
- Within five years, a Global 2000 company will lose significant market share due to a behavior-manipulation scandal.
- Within five years, some Global 2000 companies will begin hiring employees based both on self-reported experience and actual data from previous positions.
- In five years or less, governments will collaborate with businesses to drive sustainability-oriented shifts in social behavior. Energy efficiency, greenhouse gas emission reduction and landfill diversion will be the first targets.
- By 2022, multinational organizations will introduce technology that can tell when a worker is frustrated and adjust the tone of the feedback that worker sees.
As “design for humans” enters the technological mainstream, it will create an urgent need to define new technology standards, government mandates and even the social contract. Next week we’ll wrap up this blog series with a look at the final trend in the Accenture 2017 Technology Vision for Insurance report: “the Uncharted.” The full report is also available here.