While the next wave of digital technologies will transform the nature of insurance organisations—including what they do and how they do it—those that succeed will do so by dramatically transforming their workforces and cultures to operate in a digital world, according to a new report from Accenture Research.
Based on a survey of nearly 450 insurance executives in 15 countries, the report, People First: The Primacy of People in the Age of Digital Insurance, states that the next wave of technology—Internet of Things (IoT), platform-based ecosystems and artificial intelligence—is maturing and is expected to ultimately transform insurance.
This year’s study highlights five emerging technology trends shaping a new digital landscape where people come first.
The volume of data that insurers need to gather, manage and analyse is growing at an exponential rate as cars, commercial and industrial equipment, fitness wearables, and homes are woven in. Armed with real-time data, insurers can move away from underwriting risk based on historical data, and paying out claims based on damage assessment, towards helping customers reduce risks, prevent losses and achieve better personal and business outcomes. In the survey, 35% insurers reported over 15% cost savings from automating systems and processes.
The workforce needs not only to adapt to meet evolving demands from employees and consumers, but also to develop the skill sets to achieve its new goals. For example, underwriters need to team with data scientists to leverage new and broader sets of data from both within and outside the company. In the survey, insurance executives reported that “deep expertise for the specialised task at hand” was only the third most important characteristic they required for employees to perform well in a digital work environment.
The rise of platforms represents the advent of demand-side economies of scale, otherwise known as ‘network effects’. This decisive economic shift combines the impact of the internet, digital technologies, and platforms. The demand-side model means companies can create value by tapping into resources and capacity that they don’t have to own. How to approach platform-based ecosystems may vary in different markets and for different kinds of insurance.
Leading insurers are evaluating the new partnerships and organisational structures they need to thrive. Similar discussions are playing out across different segments of the insurance industry, as insurers recognise that technology will not merely automate processes, but change the nature of risk transfer and recovery. Preventive maintenance of industrial equipment in mines, plants and factories—guided by sensor data and intelligent automation—could help reduce insurance claims for damaged equipment or business interruption. In the home, sensors and other devices are being connected to ecosystems of providers offering repair services, security, emergency services, and more.
Insurers are at an especially high risk of cyberattacks and data breaches because of the value and volume of the personally identifiable information they manage. What’s more, insurers need to show that they are committed to using this data in ways that are fair and transparent to the customer. As data-centric products and services put datahandling concerns in the spotlight, 84% of insurance executives agree that their companies are exposed to exponentially more risk. Digital ethics is broader than privacy, encompassing the operational processes.