Other parts of this series:
Digital disruption could generate US$375 billion for insurers in the next five years
Insurers are fast recognizing that they need to restructure their businesses to take advantage of the huge opportunities being created by digital disruption.
Many carriers are looking to new business models and technologies to help them become agile businesses that constantly give their customers enticing services and experiences. We call such highly agile organizations: “living businesses”. They recognize that ceaseless innovation, strong ecosystem partnerships and the ability to continuously adapt with speed and at scale are vital for total customer relevance and sustained growth in the digital economy.
The incentive for insurers to increase their agility and seize emerging digital opportunities is enormous. We calculate that the opportunities created by digital disruption could boost insurers’ worldwide revenues by as much as US$375 billion in the next five years. Carriers that ignore these opportunities, or delay too long before responding to them, will not only forgo a share of this windfall. They’re also likely to see their costs climb and their revenues sag as digital disruption further undermines traditional businesses.
Our research shows that many insurers have begun implementing agile business models and methods. A third of the insurance companies we surveyed for our global Technology Vision survey, for example, have already piloted or implemented agile frameworks for product or service development. Approaches such as the Scaled Agile Framework (SAFe), Large-Scale Scrum (LeSS) and Disciplined Agile Delivery (DAD) allow organizations to swiftly scale-up agile practices and processes. They accelerate the spread of innovative, flexible and co-operative activities throughout an organization.
Nearly a tenth of the more than 600 insurers we surveyed reported that their agile frameworks are already helping them generate new revenues or are delivering other benefits. Around a quarter of the insurers are piloting, or have recently implemented, agile frameworks. Less than 10 percent have opted not to use these new approaches. Life insurers and pension administrators are, on average, slightly ahead of property and casualty insurance providers in adopting agile frameworks.
Not surprisingly, cloud computing is the most popular technology solution for insurers looking to increase their agility. Big digital services companies such as Amazon, Microsoft and Google have keenly promoted their cloud offerings in recent years and emphasized likely cost savings and efficiency benefits.
Just under 70 percent of insurers are planning to move to cloud solutions or have already done so (see illustration below). The extent of the shift to the cloud among life insurers and pension administrators is on a par with that of property and casualty insurance providers.
Analytics is another key technology that plenty of insurers are deploying to improve their agility. Around 30 percent of insurance providers are planning to use advanced business analytics or predictive intelligence. A further 26 percent have already launched such solutions or are piloting them, while 9 percent have begun reaping benefits from these implementations.
In my next blog post, I’ll discuss how many insurers are looking to new business models and methods to help them establish additional revenue streams. Until then, have a look at these links. I think you’ll find them useful.