It’s become an all-out arms race. For several years now, the new wave of digital technologies that is washing over and changing the face of so many industries has appeared to be just lapping at the shores of the insurance sector. Not anymore.
As Chris McMahon details in our cover feature on 2015’s top five technology trends, the insurance landscape is rapidly changing from what it was even five years ago. A shrinking market and a much more competitive environment have intensified the pressure on insurers to capture new customers and keep their current ones satisfied. And with most customer interactions taking place online today, even the most recalcitrant insurer has finally gotten the message: Go digital or go home.
In our report starting on page 10, Kevin Miller, vice president of IT strategy and architecture at CUNA Mutual Group, puts it this way: “When I say that the race to be a digital insurer is on, it’s on, it’s real and it’s serious, and companies need to be paying attention to it.”
During 2015, this race will revolve around five key technology trends, which taken together will help insurance companies behave more like digital insurers. These five trends include accelerated core systems modernization, more extensive use of analytics, the widespread adoption of mobile computing, and continued steps toward embracing the Internet of Things — all in the service of furthering the digital customer experience. If we had added a sixth trend, it might have been enterprise content management, which is helping insurers retrieve and deliver all the digital data they’re generating. For a deeper dive into the significance of this technology, see our report on page 22.
We also take a hard look at how digitalization will impact underwriting, the most essential function at any insurance company. Here, too, new technologies like predictive analytics and big data are driving a radical shift, forcing insurers to rethink how they price their policies and manage their risks. For more on how this is playing out, turn to our story on page 17.
Seth Rachlin, vice president of insurance at industry consultancy Capgemini, captures the urgency surrounding these changes when he tells McMahon, “There isn’t a major carrier out there that isn’t devoting significant attention and spend to analytics. Even companies that are very mature from an analytics perspective are doubling down, because they know it’s an arms race. To be a laggard in the category likely means significant adverse selection; that obviously has huge consequences.”
Rachlin’s observations about analytics apply to our other top tech trends as well. Taken together, they will force insurers out of their comfort zone and into the less familiar but potentially much more rewarding realm of innovation.
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