Changes in consumer behavior, technology, and data and analytics are reshaping traditional insurance business models—and accordingly, changing what it takes to compete. What are some of the game changers in the digitally connected insurance playing field?
Game changers in the new insurance playing field
Accenture has identified four main game changers in the insurance industry:
- Shrinking profit pools: In the medium term (5–10 years), we expect existing revenue sources and margins to come under threat. For example, growth of the sharing economy, coupled with advances in autonomous car technology, may drive down vehicle ownership and the market for auto insurance. Similarly, the Internet of Things may help insurers mitigate risk and reduce claims frequency and severity—which would likely affect premiums.
- New risks and changing risk curves: A digital future means that new sources of risk may emerge. Some already have, such as cyber risk and drone risk. On the other hand, these developments may also enable a better understanding of existing risks, like natural catastrophes, as well as the ability to enable more dynamic underwriting to keep up with more frequent shifts in risk profile.
- Hybrid insurance products and services: A number of Accenture reports have identified the need for insurers to shift from a role of risk coverage, to risk prevention. This can help them position themselves as trusted advisors who are part of customers’ everyday lives.
- Shifting competitive landscape: Customer expectations are growing higher. Insurers can no longer rely on meeting standards set within their industry, especially as digitally enabled, customer-centric companies like Google enter the insurance market.
Join me next week as I discuss ways for insurers to adapt in the new playing field. As the saying goes, the best offense is a good defense.
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