In Part I of this article, we examined four of the eight major technology trends affecting the global insurance industry, here we present the remaining four. While both P&C and Life insurers are striving to improve data management, implement advanced analytics and harness cloud computing -- moving to service-centric rather than server-centric architecture to create flexible, responsive and agile business models and capabilities -- they must also address significant concerns related to security, privacy and the overall user experience.
The four key trends critical to these areas in the next five years are:
1. Reflexive and appropriate IT security that identifies and prioritizes gaps and vulnerabilities. Insurers have always shown concern for the security of customer data, but now -- due to increased regulation and a number of well-publicized security breaches -- protecting such data has become a top priority. As the volume of data increases, security becomes harder to control, and the goal of 100 percent security becomes more and more unrealistic. Insurance companies must instead adopt a more pragmatic approach that responds to the different demands of different parts of the value chain.
To accomplish this, insurers must focus on major gaps and vulnerabilities, using technology to embed security into processes, data and infrastructure. Wherever possible, insurers should bypass the human interventions that have been responsible for a significant number of security breaches. IT security will also be paramount as insurers move into using new and emerging technologies such as cloud computing and digital mobile channels. Insurers must automate and embed security in such systems -- rather than relying on ad hoc responses -- and must also cultivate a culture of security through training and awareness programs.
2. A risk-based approach to data privacy. Like security, data privacy will never be 100 percent guaranteed. Yet regulation and customer expectations mean any breaches of privacy can have serious consequences. In a connected world, corporate reputations can suffer rapid and extensive damage, wiping millions from market values overnight. Insurance companies need to understand where they are most vulnerable, and drive a risk-based approach to the way that they handle customers' data. As new channels -- such as social media -- come online, it will be ever more important to ensure that rules and regulations addressing data privacy are put in place.
3. Social platforms to drive business intelligence and create new customer channels. Consumers are increasingly willing to share their perceptions and experiences with one another in a wide variety of social media settings. Insurers are responding to this by investing or planning to invest in enhancing their digital marketing capabilities to attract customers through sites such as Facebook. The development of social media creates, potentially, a valuable source for sales and boosting customer satisfaction. If addressed in the right way, social media can help to develop trust and a more direct relationship between insurance companies and their customers.
Control of social media is not possible in the way that it is in other channels. It requires a dedicated team to manage responses and feedback, making sure that they are directed to achieve a fast and knowledgeable response. Policies and governance need to be tightly defined and effectively communicated, as the speed and extent to which bad news can travel far outstrips the pace and reach of traditional media. On the other hand, social media platforms offer an unprecedented opportunity to engage customers, build communities and create products for the right people at the right time. Social media also provides an unprecedented window into customers' lives -- and this can be used to compare the information about what customers say they do, and what they are doing in practice.
4. User experience becomes the paramount driver of new products, services and marketing. The principles of business process design have traditionally focused on considerations such as optimization and cost. In the future, the way that a user experiences a service will be a paramount consideration.
Mobility is now the main focus for new technology investment in distribution channels. One estimate suggests that, by 2020, there will be more than three billion mobile devices making 450 billion mobile transactions. As devices proliferate, from smart phones to tablets, insurance companies will need to understand how both their customers and workforce can gain from their use. Insurance companies will be able to deliver tools to their customers that will allow them to self-manage many of the processes, cutting out intermediaries -- both in-house and third parties.
Insurance companies can also use direct channels such as mobile to shorten the sales cycle -- even linking mobility to presence and location-based software embedded in devices that can help to make timely and relevant offers when a customer is in a specific location or circumstances. Even further down the line, video and gaming will enrich user experiences. Video can provide instant access to expertise, for example, while gaming can be used to teach customers about new products, engaging their attention more effectively than traditional forms of advertising or communication. Using the approach adopted by games developers offers insurers the chance to create simple, easy-to-use cross-platform applications that can help customers understand and manage complex products -- such as life insurance -- more effectively.
Each technology trend is important in its own right, but insurers will need to develop whole-enterprise, integrated approaches to harnessing the power of new technologies. We believe that insurance CIOs, in particular, will have a critical role to play in creating strategic responses to the rapid, technology-driven changes in their markets, the behavior of their customers and within their internal organizations. Combining technologies will foster high performance through greater efficiency, more satisfied customers and faster, more responsive business processes.
To read Part I of this article click here.
About the Author: John Del Santo is managing director of Accenture's global insurance practice.