Confronted with a fast-paced, highly volatile environment, rapidly evolving customer preferences, new regulatory initiatives and a host of innovative and disruptive technologies, few insurers have the luxury to sit back and think about longer-term trends in technology and their implications for the industry.
Market pressures have, in effect, forced every insurer to become a digital insurer. Both property and casualty and life insurers are using digital technologies to enhance the customer experience, manage risk optimally and improve profitability. Some are doing this on an ad hoc basis and some are carrying out a larger strategic plan.
To help clients prepare for this digital future, we examined the major technology trends affecting insurers and, as part of the larger Accenture Technology Vision 2013, identified seven emerging IT developments that will have the greatest impact on P&C and life insurance enterprises over the next few years. These are:
1. Relationships at Scale: Moving beyond transactions to interactions. We see the imperative to better manage relationships at scale as the trend that will most profoundly transform the insurance industry over the next five years, dictating which carriers will be winners and losers in a highly competitive market.
Digital relationships and personalization at scale are opportunities to establish deeper consumer insights, offer more compelling new experiences and deliver customized interactions. To accomplish this, digital insurers are leveraging sophisticated analytics and optimization engines to increase the level of personalization and relevance through their digital channels, boosting click-through and conversion rates.
2. Design for Analytics: A blueprint for the answers. Insurers are trying to come to grips with a range of factors holding back the return on their investments in data analytics, including a lack of enterprise-wide focus, a tendency to "analysis-paralysis", and concerns about the quality and availability of data. The reality is, however, that data and the tools to leverage it are more accessible and affordable than ever before. Insurers are no longer suffering from a lack of data, they are suffering from a lack of the right data with the right quality to effectively define their strategic direction.
Repurposing this data to make strategic decisions will demand that insurers treat data less as a warehouse and more as a data supply chain, enabling insurers to manipulate, expand, update and analyze data to transform it into new products and business insights.
3. Data Velocity: Minimizing the gap between insight and action. Thanks to unstructured data from social media, mobile devices, sensors and applications, the volume and variety of data and data sources available to business leaders are greater than ever. Emerging technologies are helping insurers deal with data velocity, enhancing the way large quantities of data are managed and moved, and accelerating the data cycle from insight to action. Technologies such as data appliances, no-SQL databases, and in-memory computing are accelerating the whole data lifecycle by providing, for instance, the ability to query extremely large quantities of data very rapidly.
4. Seamless Collaboration: Embedding collaboration into business processes. Advances in technology have made it easier than ever for people to work together, no matter where they are. But insurers are only now beginning to move beyond stand-alone social and collaboration tools. The new approach is to build social, collaborative applications throughout the enterprise and embed them into core business processes. The technology to integrate collaboration into insurance processes exists in tools such as Yammer, Chatter, JAM and OpenSocial.
5. Software-defined Networking: The last mile of virtualization. Virtualization investments are already paying off in servers and are beginning to pay off in storage, but the network has remained an untapped opportunity because there has been no easy way to make it dynamic. Software-defined networking, however – which IDC expects to grow from a$360 million market in 2013 to $3.7 billion by 2016 – completes the last mile of virtualization and enables insurers to finally realize the vision of a dynamic enterprise. By virtualizing the network, insurers will be able to extend the life of their infrastructure and reap the full value of their virtualization investments.
6. Active Defense: Adapting defenses to threats. With insurance companies transforming into digital businesses, it is critical that measures are put in place to secure sensitive data, applications and systems. As the digital transformation takes hold, insurers' IT departments are struggling to keep pace with recent advances in security technology. Insurers that integrate solutions and approaches using holistic security architecture can make the best use of new active defense technologies to make it more difficult, more expensive and less profitable for attackers to do their work.
7. Beyond the Cloud: Weaving the cloud into the enterprise to create business value. The benefits of cloud computing, in terms of cost reduction and enterprise agility, are already well-understood and leveraged to many industries. Yet only a few insurers are really exploiting the advantages of a true hybrid cloud environment that uses provision models such as infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS). Leveraging cloud services for core transaction processing functions such as first notice of loss, an application can be brought to market in four months rather than two years, reducing costs and shifting the IT investment from capital to operational expenditure.
These seven trends can help insurers successfully address their most pressing challenges and opportunities. Insurers that anticipate, respond to, and even pre-empt technology-driven disruptions will be in a better position to offer relevant, personalized products and services. This, in turn, will help them "own" the customer relationship and gain a sustainable advantage over slower-moving competitors.
About the author: John Del Santo is Accenture’s Senior Managing Director – Global Insurance, and is responsible for setting the industry group's overall vision, strategy, investment priorities and client relationships. He is also a regular contributor for Accenture Insurance Blog.