A major survey of global insurance industry leaders has revealed the aspects of technology that are having and will have the biggest impact on the industry.
The Timetric Technology in Insurance: Impact and Disruption
survey found that insurers around the world believe that big data and analytics is the technology with the most impactful presence on the insurance industry, both now and in the foreseeable future.
51% of respondents noted that the technology has a ’significant’ impact on the current industry and 49% believe that this will increase to ‘significant’ levels in years to come.
Automation took out the second spot in both categories while social media was seen to be more important than the Internet of Things (IoT) at the moment, but less so in future.
Bruno Davila, global head of insurance at Timetric, told Insurance Business
that the survey shows the change that could hit the industry over the next five years.
“The insurance industry globally is taking a serious stand on technology – global insurers have now got Data Science teams, who are investing on global placing platforms, telematics, etc.
“Over the next five years, we will see that insurance industry’s decision-making processes will increasingly rely more on modelling of multi-variable data than experience alone.
“In our opinion, since major investments have already been done on big data and analytics, we expect these technologies will provide a new edge to how insurance works.
“We also expect operational expenses to shift on a downwards trend for companies that have already started working towards understanding how new technologies can positively affect them, as well as introducing its findings in their daily routines from claims handling through pricing models.”
Davila said that insurance businesses are now thinking about the long-term impacts of technology on the industry.
“Arising new technologies like the Internet of Things, blockchain and wearables are capturing the attention of the industry for their potential to change further the most basic ways in which risks are conceived nowadays,” Davila continued.
“Insurance professionals are starting to ask themselves, for example, how extended use of blockchain could affect business interruption claims or how to deal with signal failures of devices controlling household functions.”
With the advent of new technologies, Davila noted that the door is open for outside disruption, with one particular market taking the focus.
“It is our view that retail intermediary channels are, at the moment, the most at risk to be disrupted from outsiders - like Google and Amazon, for instance,” Davila continued.
“It seems unlikely to us that disruptors will choose, at first, to underwrite insurance – as there is little appetite to walk into a highly regulated sector with capital requirements and risk transfer that requires insurance specific expertise.
“We expect disruptors will thrive where new technology will be implemented first, changing the way insurance has worked in the past. Service providers for the insurance industry should stay alert of rapid change in the industry and the implications for the future of their business.”
Brokers and intermediaries face threats not only from disruptors outside the industry, but those inside the industry as technology changes the business.
“Areas insurers are looking to enhance are client engagement, loyalty and satisfaction,” Davila said.
“Historically, intermediaries have managed the relationships between insurers and customers, making it difficult for insurance companies to work aggressively on their retention levels.
“With new technologies – connected homes, telematics, wearables, etc. – interacting with a customer on, as much as, a daily basis, by recording driving or health statistics, insurers are seeing a golden opportunity to build trustworthy relationships with their clients, getting to know them better, beyond the risks they are looking to cover.”
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