Controlling the digital pressure valve becomes more challenging each year as insurance firms evaluate how the trends shaping the future add value to their customer proposition.
The speed of change is relentless. 96% of insurance executives say the pace of innovation in their organisation has accelerated over the past three years due to emerging technologies according to Accenture.
As we head towards the start of a new decade, competition from InsurTechs and tech giants like Amazon means firms that stall digital progress will struggle to hold their lines. But what does the future hold? Let’s take a look at 4 digital trends that are high on the priority list.
#1 DARQ technologies
DARQ technologies – distributed ledger / blockchain, artificial intelligence, extended reality and quantum computing – at least one of them is being experimented with by 93% of industry leaders Accenture reports. Over the next three years, 42% of leaders say artificial intelligence will have the greatest impact on their business. Distributed ledger / blockchain come next at 20%, followed by extended reality on 19% and quantum computing on 18%.
Digital leaders are already leveraging the masses of data they collect on their customers to gain a better insight into motivations, needs and behaviours to fine-tune policies and offer customised solutions. Let’s get back to Accenture on this – 84% of insurance executives now think that digital demographics are the way forward to drive growth by meeting unmet customer needs.
This data won’t just come from computers and mobile devices. Opportunities are opening up for the Internet of Things to add another valuable layer of data. And consumers are up for this data sharing. PwC research found that 67% of consumers would be willing to attach a sensor to their car or home if doing so meant lower premiums. Moreover, the research also discovered that 50% of consumers would be prepared to give their insurers additional personal and lifestyle information to enable them to seek the best deal for relevant services on their behalf.
This quote from the Head of Risk Management at Reinsurance, as told to Deloitte, sums up the perils of strategic inertia on data analytics capabilities in a nutshell.
“InsurTechs have the upper hand when it comes to providing personalised policies and present more enhanced aspects which are intriguing to customers, hence the challenge to our core business. Over the next three years, we need to step up and work on strategies to work with, and in some cases, combat the new players in the market and step forward.”
#3 Adopting a new ecosystem
Insurers are also rethinking the way they build and deploy technology to keep ahead of the curve. Deloitte Partner Andy Lees asserts that insurers will need to “adopt an ecosystem approach that involves partnerships and outsourcing, as well as in-house teams. It will take a lot of effort to transition from legacy systems to open architecture.”
#4 Data security and regulation
In adjusting to digital disruption, cyber and data regulation is a top strategic challenge for 51% of insurers according to Deloitte. Pioneers in the sector are looking at how RegTech can help firms better comply with regulation and enhance their data strategy.
How will these trends impact your business? Are you prepared?