Six trends will have a transformative effect on insurance over the next three to five years, according to “Accenture Technology Vision 2014 For Insurance; From Digital Wallflower to Digital Disrupter,” from Accenture. Those trends include the blurring of the digital and physical; crowdsourcing and the rise of the borderless enterprise; the increased availability of data and the ability to put it into circulation through a data supply chain; harnessing advanced hardware; the business of apps; and architecting for resilience.
“Those that ride the digital wave brought on by trends such as crowdsourcing, advanced analytics and visualization, intelligent devices, hyper scale computing, and modular business apps will be able to stave off competition from would-be disrupters and redefine the industry on their own terms,” Accenture said.
The blurring of the physical and digital is the overarching trend for insurers, as it has the potential to disrupt markets, and drive new revenues and profits in industries and customer segments where they have not traditionally competed, according to the report.
Accenture research found 67 percent of insurance customers
“Consider, for example, how much trust some consumers have in organizations such as Google and Facebook or the brand loyalty that some automobile manufacturers command. Now look at insurance, where customers have little loyalty — and will switch providers simply to save a few dollars a month with little to entice them to stay,” Accenture said.
Other potentially disruptive digital technologies include devices that fall under the rubric of the internet of things, such as sensors embedding in home security systems, automobiles, consumer wearables such as Nike’s FuelBand, Adidas’s miCoach and Fitbit for monitoring health, self-driving cars and other emerging devices and technologies.
Crowdsourcing can offer insurers access to non-native talent and insights. Crowdsourcing is different from employing contractors or temporary workers, Accenture said, and the channels, structures and transactions are different and more fluid and versatile than other labor models, Accenture said.
For example, Allstate turned to the Kaggle crowd sourcing platform to create a better model for predicting bodily injury liability based solely on the characteristics of the insured vehicle. UnitedHealth Group used the InnoCentive crowd-sourcing network to come up with new concepts for online member experiences to supplement the thinking of its own innovation group.
“In insurance, the foundations for effective crowdsourcing strategies are in place. Most insurers have some presence in social media, where they interact with customers transparently and in real time,” Accenture said. “Accenture research indicates that 55 percent of customers would be interested in insurance products and services offered on social media.”
To unlock the value of their data, insurers must treat data more as a supply chain, Accenture said, enabling access to the data and allowing it to flow easily and usefully through the organization and eventually to partners as well. That’s why insurers are implementing big-data tools, investing in advanced analytics applications and purchasing data visualization software.
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“The supply chain begins when data is created, harvested, imported or combined with other data,” Accenture said. “The data then moves, flows and transforms through the supply chain, incrementally acquiring value. The supply chain ends with a valuable insight as its output. Guiding this movement is a federated data services platform, which unifies data from multiple systems into a single view and enables business users to interact with the data in a standardized way.”
With improved access to information the path to discovering new insights is changing, enabling data scientists and less technical users to do analytics more easily and intuitively, Accenture said. When data is manipulated as it passes down the supply chain, value can be added and obtained in ways that previously were impossible, Accenture said, because data discovery techniques enable businesses to discover answers to questions may never have known to ask.
“Now, companies can take advantage of the opportunities for data monetization—to sell data insights directly, share them through partnerships, or develop entire ecosystems around them,” Accenture said. “Insurers have the opportunity to think outside of the box for new ways to appreciate and take advantage of the true value in their data—provided they do so in a way that is sensitive to the thorny issue of data privacy.
The hardware world is the focus of new development as demand for bigger, faster, more efficient data centers increases and the number of sensors and onboard computers multiplies in the context of the internet of things, which includes wearable and telematics, Accenture said. And the data generated by these devices, social media, third parties and insurers’ digital channels and contact centers could threaten to overwhelm insurers’ legacy IT systems.
“To get started, technology leaders at insurers need to ask themselves, What could our business do with unlimited computing power that can be turned on and off as needed?’ Then, they must think about how their organizations can tap into flexible computing power to meet the needs of the business at the lowest possible cost,” Accenture said. Potential solutions include leveraging external clouds and building big-data-oriented computing infrastructure on-premise.
The way insurers build and deploy software is changing, Accenture said. Enterprises are moving from applications to apps, and as insurers push for greater operational agility, there’s a shift toward simpler, more modular and analytics-enabled apps. Insurance apps will draw on data and services from multiple sources to offer single-screen solutions to customers for risk advice, risk cover and complementary services.
“Where upgrading a claims or policy platform was once a multi-million dollar project that could take two years or more, today such a project can be broken into smaller chunks so that value can be delivered at milestones measured in weeks or months rather than years,” Accenture said. “Now, the next wave of software innovation has arrived, promising even more flexibility and simplicity.”
One of the benefits to insurers is that apps they can help increase customer retention and reduce the size and frequency of claims by encouraging risk-friendly behavior, Accenture said. Users, on the other hand, can be rewarded with lower premiums, discounts, coupons from partners or loyalty points, for example, for participating. The increasing usage of tablets and mobile phones is another trend amplifying the importance of the move to apps.
“A big and positive consequence of the shift toward an enterprise app world is that business functions are partnering with technology organizations to assume joint ownership of the new agile applications,” Accenture said. “The back-end services—from data centers to networks—still fall squarely under IT, but in more and more organizations, the lines are blurring as the business takes a more active role in many aspects of front-end applications.”
IT leaders must ensure systems, and to some extent those of their business partners, are designed for resilience under failure. In addition to dangers such as extreme weather, civil unrest and other catastrophes, Accenture said insurers’ IT infrastructures are also targets for cyber-criminals who are using increasingly sophisticated techniques to bring enterprise systems down.
“Resilience does not simply mean putting in place the right cyber-security structures and deploying best-of-breed highly available systems,” Accenture said. “It calls for a wholesale shift in mindset to the idea of 100 percent uptime. The CIOs who truly get the concept of resilience have begun transitioning their organizations and those of their key partners to an always-on state.”
Most insurers have adopted digital distribution channels and grafted their digital strategies onto legacy systems, business processes and business models, Accenture said. Their next step, however, is to plan for a more thorough business transformation.
“The choice for most insurance carriers is this: transform yourself into a risk manager, advisor and value aggregator at the center of a digital ecosystem that delivers high-value services to customers every day, or be pushed to the periphery as an interchangeable, commodity service provider with limited control over your destiny.”
