Every day we use a dizzying array of technologies in our personal and business lives. The news and developments regarding technology advances are difficult to keep up with, unless you are practically doing it full time. Maturing technologies such as mobile, analytics, cloud, and others are widely available. Emerging technologies such as the Internet of Things, wearables, 3D printing, and autonomous vehicles seem to be moving forward at breakneck speed.
All of these developments combine to influence customer expectations, change the risk landscape, and provide new opportunities for operational efficiencies. They also create opportunities for new competitors that are emerging in the insurance industry. So how far along are insurers in adopting these maturing technologies and strategizing for the emerging technologies? Is the industry in general keeping up? Following are some examples from SMA research on the levels of adoption and the areas where insurers see business value in new tech.
What is a maturing technology, anyway? As recently as two to three years ago, many in the industry considered mobile, social, cloud, and analytics to be “next-gen” technologies. Today these and others, such as collaboration and telematics, are what we consider to be maturing. Our research on adoption and business value bears this out. For example, mobile technologies are now in broad usage. In 2013, 13 percent of insurers reported no activity and 52 percent were just developing their mobile strategies. Today only 3 percent of insurers report no activity, while 37 percent are developing strategies. Also in 2013, the top focus area for collaboration was improving operational efficiencies, but today the top use is for customer service: having gained experience internally, companies are now extending it out to customers and agents.
Just two years ago cloud services were relatively new to the industry, and insurers were using cloud for infrastructure services and non-core applications such as e-mail and contact management. Today cloud is leveraged more widely across the spectrum, including areas such as policy and claims. Most in the industry now consider these maturing technologies to be a low risk, high value equation, which explains why a high percentage of insurers plan to continue increasing investments over the next three years.
There are a wide variety of emerging technologies. Many insurers find it difficult just to track developments, let alone consider how they may impact their strategies. Our research shows that a select few leaders are actively experimenting with nine key technologies that SMA has identified as high impact for insurance. These technologies are the IoT, drones, artificial intelligence, wearables, biotechnologies, semantics technologies, autonomous vehicles, gamification, and 3D printing. The strange dichotomy here is that insurers expect many of these technologies to drive major industry transformation not 10 years from now but in the next 3-5 years yet few are doing anything about it. Insurers believe that the IoT, drones, AI, wearables, and gamification all will have a major impact in 3 years. Some of the examples of experimentation are visible, such as licenses to fly drones, new life products based on wearables, and pilots for connected homes. Others are happening quietly as companies look for competitive advantages. But all in all, the percentage of companies actively incorporating emerging technologies in their strategies is quite low today.
So Are We Keeping Up?
Some insurers are aggressively leveraging technologies, moving beyond operational efficiencies to truly engage customers differently, design new products/coverages, and rethink their business models. Others are struggling to keep up. But in general, our research reveals an industry that is moving forward with new technology adoption at a pace that is fast for our industry, although not at the same pace as other industries. Many insurers are getting a fairly good handle on the maturing technologies. Emerging technologies are a different story. These technologies have the potential to dramatically change the industry, yet many find it difficult to keep up the pace. The solutions to keeping up and finding the business value are not simple. It takes talent, money, time, and bold strategies. But in today’s digital world, doing nothing about it is not an option.
This blog entry has been republished with permission.
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