According to the latest World Economic Forum report – ‘The future of Financial Services’, the most imminent effects of disruption will be felt in the Banking sector; however, the greatest impact of disruption is likely to be felt in the Insurance sector. As if the ever-increasing threat of natural or man-made disasters wasn’t enough for the USD 4 trillion Insurance Industry, it is now staring at the forefront of one of the many challenges – Emergence of hitherto new technological advancements!
A survey conducted among CEOs worldwide, made it clear that about 73% Insurance CEOs feel more vulnerable to emerging technological disruption as compared to 66% in Banking & Capital Markets, and 60% in other major industries.
With so many technology innovations like IoT (Internet of things), Artificial Intelligence, Telematics, Driverless cars, etc., the Insurance industry had to revamp itself not only to cater to the risks, but also to align its own IT strategy, in a bid to use these innovations effectively. In addition to this, the insurers now have started to face competition from stakeholders like Amazon, Google, Facebook, and a plethora of other non-traditional players!
The good news is that, the technology emergence has provided immense data to the insurers, which can be churned to generate powerful algorithms, thus enabling the transformation. Here’s a look at few of the emerging technologies:
- Include connected vehicles, homes & wearable devices, smartphones
- The data gathered through the ecosystem of connected devices, drives a lot of informed decision-making
- These are adaptive systems, which learn and adapt from its interactions with the environment
- It gathers and analyzes the data from disparate systems, and drives self-learning algorithms and procedures
- These are remote-controlled or unmanned vehicles
- They provide an overview of a particular area or an object from a distance, and have the ability to record photographic information and data
- Do not need traditional banking methods for payments
- Quick payment or money transfer, through smartphones and other non-traditional methods
- Chain of time-stamped data blocks
- Auto-validation and safeguarding of data
Thus, it is important for the Insurance companies to understand technology capabilities brought by the emerging technologies and leverage them in the business lifecycle.
Following is the view on potential use cases of emerging technologies in the Insurance Value Chain:
The technology emergence brings in disruption and it is coming really fast. Insurers worldwide need to think and act immediately to be relevant in the eye of the emerging technologies. Although many insurers have taken the first-mover advantage, and have begun harvesting and leveraging the new technologies in their IT roadmap, there is a need to build a rapid action plan, right now!
The future of financial services – The world economic forum – www3.weforum.org/docs/WEF_The_future__of_financial_services.pdf
Commerzventures – http://fintechnews.ch/insurtech/commerzventures-report-blockchain-tech-wearables-ai-to-transform-insurance/3393/