technologies is gathering speed and having an impact on lives,
businesses, industries, and the economy. This comes at a time
when the convergence of advancing technologies, increasing
customer expectations and demands, and access to capital for
new technology start-ups are magnifying the extremes—from
disruption and destruction to innovation and transformation.
The impact on insurance will be profound, pivotal, and
game-changing. Never before has such a breadth and depth of
technology advancement had as much influence as what we are
experiencing now. Based on SMA’s research report, Emerging
Technologies: Reshaping the Next-Gen Insurer, nine emerging
technologies are seeing an impressive and rapid adoption: 3D
printing, the Internet of Things, drones/aerial imagery, driverless vehicles, wearable devices, gamification, artificial intelligence, semantic technologies, and biotechnology.
Five of the nine are projected to arrive at or go well beyond
the tipping point within three years. Even more impressive is
all nine are projected to surpass the tipping point in five years.
The failure to develop strategies, experiment, and invest in these
technologies today will place many insurers at significant risk,
because the amount of time it takes for the slower movers in the
industry to catch up can be as much as five years. Given the pace
of adoption, that amount of lag time carries more potential for
damage than it did in the past. The astounding influence of these
technologies over a relatively short period of time will begin to
delineate a new generation of market leaders.
Io T is redefining businesses. Sensors are increasingly being
built into products or embedded into things such as animals,
land, and people and they generate massive amounts of data
that could be used by companies to offer new products, services
or solutions. It is estimated that by 2020, there will be 8 billion
people on earth and 50 billion connected things with 5 million
apps. In SMA’s Emerging Technologies report, the Io T is leading
in the adoption of emerging technologies by insurers, with nearly
25 percent in some phase of deployment, putting adoption close
to the tipping point already.
These results accentuate the conclusion that nearly every
business will become an Io T business, bringing traditional,
physical products into a new digital world. For insurers, this will
shift the focus from risk protection-only products to customer
value-based products and services, including risk avoidance,
risk mitigation, and even new value-added services, potentially
from outside traditional insurance.
The Io T has the power to create new business and revenue
models, to generate business value to counter product com-moditization, enable mass personalization, and gain deeper
customer insights for creating new products and services. Those
who do not embrace Io T run the risk of becoming irrelevant.
Autonomous vehicles are already here. While Google gets
a great deal of press about their driverless vehicles, many traditional automotive manufacturers are quietly preparing plans
to introduce their own autonomous/driverless vehicles in 2020.
But more importantly, in 2016 these manufacturers will begin
the transition by introducing cooperative solutions that will
include “traffic jam assist” systems that take over braking, steer-
ing, and acceleration for vehicles moving in low-speed traffic.
The real game-changer will start with the introduction of
technology solutions that can be installed in existing vehicles,
creating autonomous capabilities at a relatively low cost. So
while the regulatory evaluation on driverless vehicles contin-
ues, autonomous capabilities in both new and existing vehicles
will rapidly disrupt business model assumptions of vehicle
insurance, including risk factors, premium models, distribution
costs, claims costs, and reinsurance costs.
Data is the new digital currency. Step aside, Bitcoin, because
data is the new currency in the digital economy. Data has always
been seen as the lifeblood of the industry, but its strategic value is
at the forefront in this new digital world. Big Data, BI, and analyt-
ics are top priorities for insurers. Data is critical to the acquisition
of insights about customers and the offerings and creation of
new products and services. Data is being connected to the cloud,
allowing data to be available anytime, anywhere, and in any way.
What will hold insurers back are the lack of data manage-
ment strategies and the deficient level of data mastery maturity.
Both strategy and mastery will be needed in ample supply to
unlock the full business value of data, whether transactional,
unstructured, internal, or external.
Pace of change demands innovation and collaboration
for future success. These are critical components for digital
companies, but the success with which they are employed will
separate the market leaders of tomorrow. The flow of informa-
tion to engage collaboration is vital to developing new products
and services. The collective intelligence of ecosystems through
collaboration promotes entrepreneurship, provides a greater
understanding of new technologies, and stimulates the learning
and creativity that are key characteristics for success.
With the explosive pace of change, the absence of collab-
oration and innovation creates significant business risk and
a potential for loss of relevance. Innovation is the price for
strategy enablement and the creation of possibilities. The com-
bination of innovation and collaboration will be indispensable
for companies in positioning, retaining, and more importantly,
leapfrogging market leadership status.
Insurance industry disruption will tear down the business
assumptions and paradigms of the last 20-30 years. Insurance
leaders that can define a future vision, create a culture of innovation, and identify and leverage these eureka moments will
position themselves as the new leaders and winners in this fast-paced environment of change and disruption. Embrace the disruption. Re-envision, reinvent, and change the business. Embrace
innovation and collaboration with an ecosystem of outside-in
thinking and collective intelligence to inspire and accelerate your
transformation. Become a Next-Gen Insurer. ITA
Denise Garth, partner at Strategy Meets Action, can be
reached at firstname.lastname@example.org.