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5 ways to make insurance a ‘living business’ through digital innovation
An increasingly digital world offers insurance carriers the ability to grow their addressable markets – and their revenue. But that depends on insurers transforming into “living organizations,” defined by Accenture as “agile, flexible organizations with fluid business and operating models and an obsession with maximizing their relevance.”

In a recent report, “Insurance as a Living Business: Explosive Growth,” Accenture says that insurance industry revenue can grow by as much as $177 billion worldwide in the next five years, thanks to digital technology increasing access to insurance products, as well as the development of new products. In addition, existing insurance spend is up for grabs for companies that respond quickly and nimbly to macro trends, to the tune of about $198 billion.

“The total that is accessible to living businesses is therefore $375 billion,” Accenture writes. “Our analysis indicates that insurers that retain their faith in the traditional business model, in preference to transformation, will contribute the bulk of this in the form of forfeited market share. This is likely to be offset only by the normal expansion of the market, as they will be able to benefit minimally from the new business opportunities.”

There are models for such transformation in other industries, which mostly revolve around helping customers use their time and resources more efficiently. Accenture highlights how cruise operator Carnival distributed medallions to its customers, which connect to sensors to offer personalized recommendations on thousands of screens around the ship and sense when a person is returning to their room to re-activate the climate control. And Michelin launched its sensor-driven EFFIFUEL initiative to help truckers manage fuel costs by monitoring fuel consumption, tire pressure, temperature, speed, and location.

“The Internet of Things and other digital technologies are likely to transform insurance by replacing pooled, historical data with individual, real-time data for risk assessment and pricing,” Accenture says. “They also create the opportunity to use this data for other services than just insurance – services that large commercial customers have been willing to pay for, and that insurers are now able to offer affordably to medium and smaller customers.”

Insurers will have to adopt five key characteristics to become living businesses, Accenture explains, which follow.
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