10 Insurance Tech Predictions for 2017
December 26, 2016 3:19 PM
Insurance 2017
After a transformative year for technology in the insurance industry, SMA partners Karen Furtado and Mark Breading, and principal Karen Pauli, think the best is yet to come. We expect the trends from the past year or two to move toward more operational phases or move to the next level of activity and impact, the trio writes in its Top 10 Insurance Predictions for 2017 report.
1. InsurTech remains sizzling hot
SMA believes 2017 could be pivotal for insurtechs future. After a period of many pilots and a small number of production rollouts, it will be time for more widespread adoption and impact from the InsurTech companies. If this does not happen in 2017, there is a risk that the venture capital, promise, and excitement will be tempered moving into 2018, it writes.
2. Digital transformation expands
Most insurers have attacked digital from an external perspective to this point, focusing on agents and customers. However, SMA predicts that in 2017, As insurers increase digital capabilities for interacting with the outside world, it becomes mandatory to enhance digital operations internally to provide the right level of support.
3. Customer experience shifts to high-value engagement
Several years of focus on customer experience in insurance has led to companies building an omnichannel foundation for digital interaction. Next, says SMA, the emphasis will be on operationalizing the customer experience, moving beyond a focus on individual transactions and individual projects to a broader objective of engaging customers.
4. Data/analytics becomes more operationalized
Insurers have traditionally been good at organizing data, but the time has come to operationalize insight, says SMA, driving strategic decisions and embedding real-time analytics into transactions and interactions.
5. Telematics starts a new growth phase
Take-up of telematics in the U.S. plateaued this year, but SMA expects that to change in 2017 for two reasons. On the personal side, the technology itself is well understood, and a variety of good solutions and providers are available in the marketplace. More insurers are now considering moving beyond pricing to include offerings related to accident avoidance, claims, theft deterrence, fraud detection, and more, the company says. On the commercial side, insurers are realizing an untapped opportunity with small fleets, SMA notes.
6. InsurTech partners critical to distribution expansion
Most insurtech startups to date have focused on distribution as many as 30%, SMA says. In 2017, the company predicts, Insurers will partner with digital distribution startups to go after new markets and introduce new products
New types of products or new segments (such as the mid-market for life insurance) will be the targets.
7. AI/machine learning hits live use cases
Artificial intelligence moved quickly from the periphery of insurance to a credible consideration when selecting new systems. Though implementation wont be broad in 2017, it is likely that there could be some head-turning examples of its use next year, SMA says, noting that one of the challenges of a technology like AI is that use cases that provide compelling competitive advantages are often kept under wraps in order to realize the full benefits of the breakthroughs.
8. Core shifts to agile, quick-implementation platforms
Insurers remain in the throes of an intense period of core systems replacement. However, going forward, implementations will focus on cloud-based core solutions that can be implemented more rapidly and adapt and respond to support new products, new business models, new distribution partners, and new customer demands, especially in P&C, SMA writes.
9. Emerging tech more broadly deployed
The line between emerging tech and established tech continues to blur as technologies gain prominence. Following a year in which drones, wearables and other Internet of Things devices, and new payment technologies made it into the market, SMA predicts similar success for blockchain, virtual reality, gamification, and artificial intelligence.
10. Solution provider consolidation continues
Guidewires buy of ISCS right at the end of 2016 capped a big year in insurance technology M&A as traditional solution providers look for ways to extend their value propositions into new areas, according to SMA. Along with the need to drive more growth, competition from traditional rivals and InsurTech entrants will result in continued consolidation of tech companies in the insurance marketplace, the company says.