Let’s face it: Insurers have had a reputation – whether deserved or undeserved – for being slow to innovate. Whatever the area – distribution, claims processing, or policy administration – insurers have kept pace with the times, but they have not been seen as leaders in adopting new technologies.
This may be changing, however. We are seeing more and more examples of insurers leading the way in using new technologies — ranging from drones to wearables to the Internet of Things — to refine their calculations of risk, to provide individualized pricing and service, and to reduce operating costs. The year 2015 is only half over but we have already seen some important events:
- Insurers USAA, AIG and State Farm have all received FAA approval to test the use of drones – USAA and State Farm to assess damage after natural disasters and AIG to conduct roof inspections and other property assessments;
- Erie Insurance enrolled eight claims adjusters in a pilot program using Google Glass to replace a host of devices including cameras, digital recorders, laptops and cell phones; and
- Liberty Mutual and American Family Insurance Company have begun offering discounts to customers who install wireless smoke and carbon monoxide detectors and agree to share data from the devices with insurers. The companies have partnered with Nest, Google’s home automation unit, to provide the service.
Accenture noted in its recent report entitled “Fintech New York: Partnerships, Platforms and Open Innovation,” that innovative startup companies are working with insurers to help transform their operations. According to the report, U.S. insurers lose $5.8 billion annually as a result of consumers switching carriers. To address this pressing concern, insurers have started to tap the innovations within the fintech community. The report notes that more than four in 10 insurers (43 percent) are either planning to buy, or already have bought, a fintech startup.
So, for insurers, innovation is becoming “where it’s at”. In the weeks to come we will explore more ways that insurers are accelerating and improving their innovation programs.