Study Reveals Impact of InsurTech on Insurance Industry
Technology has impacted virtually every aspect of our lives – both personal and business. Over the last five years there have been seismic changes in how we create, produce, consume and analyze information. The proliferation of mobile phones and other devices such as drones, wearable technology and new apps, have opened a new world of possibilities for companies in multiple industries. While many companies have been able to leverage technology to enhance and refine their business models, the insurance industry has been slow to adapt. Beyond the integration of customer facing changes, most companies have not embraced technology in other areas of business. A new breed of businesses called InsurTech companies are offering advanced products to help companies better manage risk and calculate premiums. A new survey conducted by CapGemini called 2017 World Insurance Report has been released and provides insights into insurance companies and the integration of this disruptor into their business model. To help clients, prospects and others understand the impact of InsurTech, JLK Rosenberger has provided a summary of key survey findings.
The survey was conducted to understand how companies and consumers are using and benefitting from InsurTech products. Survey participants included 100 industry and business leaders as well as over 8,000 customers of various insurance companies. Survey respondents included dozens of thought leaders and industry innovators. The results compromise responses and reactions from across the industry.
Key InsurTech Survey Findings
- Perceptions of InsurTech Benefits – The survey analyzed the perceived benefits that insurance company executives feel InsurTech can bring to their business. In order of most to least important, respondents indicated the following as essential benefits: ability to meet customers changing needs, designing personalized products and achieving speed to market, creating new business models, improving profitability and enhancing operational efficiencies. It’s interesting to note the primary perceived benefit is meeting customer needs which accounts for the prevailing attitude in the industry to date. However, as InsurTech companies continue to make advancements, it’s likely this value statement will continue to evolve.
- Importance of Emerging Technologies – The survey also asked about the importance of various emerging technologies to companies and the industry. In order of most to least important, respondents rated advanced analytics, connected devices, artificial intelligence, robotic process automation, robo-advisors, block chain and then drones as beneficial. It’s important to note that connected devices include wearable technology. Clearly companies are beginning to invest in this area since they are focusing on integration with existing IT infrastructure and processes to yield the greatest benefits.
- Technology Investment Plan – Survey participants were asked to discuss their technology investment plan and prioritized where the company will be investing resources in the months and years ahead. According to the survey, 86% of respondents are currently investing in advanced analytics, 79.5% in robotic automation, 50% in connected ecosystems and 43.2% in wearable technology. In the next 1-3 years 45.5% will invest in artificial intelligence, 40.9% in blockchain, 40.9% in robo-advisors and 36.4% in connected ecosystems. Overall it appears insurers are most interested in consumer facing technologies while others are lagging. This is consistent with further findings from the survey.
- InsurTech Impact on Business Goals – Survey participants were asked to rate the impact they believe InsurTech innovations will have on helping companies reach their goals. Findings included that 92% of respondents indicated that InsurTech innovations will help improve cost efficiencies in the underwriting and claims process. 90% indicated it will help enhance customer engagement through connected devices and 65% indicated it will help with generating new revenue streams through mobile-only solutions. While the value of InsurTech is clear, it appears various companies view the most compelling benefits differently.
The insurance industry is on the precipice of meaningful change over the coming years. The widespread use of technology will certainly impact how companies provide service, calculate risk, price premiums and engage with their customer base.