In this blog, I want to consider the concept of profitable growth in the insurance industry from a different angle: technology. As my previous blogs have suggested, sustained profitable growth depends on strategic cost reduction combined with the development of new business.
Developments in technology are having, and will continue to have, a significant impact on both areas.
From the client side, one obvious impact is increasing demand for a new type of service model. Customers want their providers to use the tools and channels that they do, they want them to help them manage rather than simply insure against their risk. They’re willing to hand over their personal information if it’s going to get them better coverage.
To meet these expectations, life insurers will need to undergo a profound transformation both of their business models and enabling technologies to become what Accenture calls digital insurers. Read more about what it takes to be a digital insurer, and explore the changing landscape of customer demands and expectations.
This is true for all lines of insurance. A technological development that has specific impact for life and health insurers is the emergence of wearable technologies, such Nike’s FuelBand, Adidas’s miCoach and Fitbit. These are all potential disruptors of the life insurance industry because they will enable life and health premiums to be adjusted in line with individual behavior.
Another example of how technology could affect the life industry, specifically the smartphone. Imagine a customer receiving, on his or her smartphone, an offer for an afternoon’s worth of life or disability insurance because the insurer can see he or she has arrived at a sky-diving club.
Then there’s the impact on insurers’ back-end systems. The move to becoming a digital insurer implies a totally new type of systems architecture, with a growing use of cloud computing to attain scalability and flexibility—while reducing costs significantly. These developments will have a significant impact on insurers’ data centers.
Speaking of data centers, the flood of data being released by this connected world—hence the connected insurer—will mean a new focus on the corresponding hardware to store and process it. Whether insurers go the on-premise or off-premise cloud-based route, they will have to understand the potential of new hardware technologies, particularly appliances like SAP HANA, Oracle Exadata, IBM PureData Systems and Teradata.
Great opportunities to find new sources of profitability and reduce costs—but only for those who have their eyes firmly fixed on the ball.
Read the Accenture Technology Vision 2014 for insurance for more information on the six trends shaping technology, and register for our forthcoming analysis of how these trends will impact the insurance industry.