Everyone is talking about emerging technologies.
Kids want drones for their birthdays. Runners want the latest in fitness wearables. Building managers want smart energy solutions. Farmers want sensors in their fields. The list could go on and include examples from practically every human endeavor.
So, how will this really affect P&C insurance? And perhaps a more important question — when will various technologies really make an impact? Ultimately, will these technologies collectively represent the industry's best dream or its worst nightmare? A new SMA research report, "Emerging Technologies in P&C: 2016 and Beyond," addresses these questions.
Behind the scenes strategy work
It turns out that there is a lot of strategy work going on behind the scenes at insurance companies as insurers think about the implications of emerging technologies for their businesses. There is a new sense of urgency about tech-driven change, with many insurers saying that the industry faces big changes in the next few years.
Based on a survey of insurers, SMA has placed 13 key technologies into three categories:
- 4 Power Players.
- 5 Fast Movers.
- 4 Sleeping Giants.
Technologies in all three categories generate some new threats for the industry, but they also create some great opportunities for innovation.
The Internet of Things dominates P&C activity among 13 key emerging technologies, ranking as No. 1 in strategy development, project activity, investment, and expected industry impact. Insurers are active in this space because they see the beginnings of new ecosystems and new value propositions in the connected world for smart homes, vehicles, cities, agriculture, and many other domains.
Potential to improve risk management
The potential to improve risk management and change the customer experience for every line of business is there. Others outside insurance already see that potential and are investing heavily, which may create new competitors and new threats.
Each of the other 12 emerging technologies comes with its own types of opportunities and threats. And two or more are often combined to create new ways to do business, enable new products, or support new business models.
Artificial intelligence and blockchain activity in insurance are gaining momentum and are expected to be a force over the next 3-5 years. Autonomous vehicles, new payment technologies, gamification, semantic technologies, and others are expected to have major implications for the industry and are garnering attention from insurers.
Moving fast enough?
Many P&C insurers are actively investigating these and other technologies, sense the urgency, are motivated to move faster, and are investing money and resources in developing strategies and pilots. But the conundrum is that many in the industry may not be moving fast enough.
For insurers that are skeptical regarding emerging tech or are stuck in old processes, technology, and culture, emerging tech may turn into their worst nightmare. For others that are bold and agile, emerging tech might be their best dream, resulting in revenue streams from new products and services, transformed relationships with customers, and new ways to improve operational efficiencies.
Mark Breading is partner at Boston-based SMA. Email him at mbreading@strategymeetsaction.com. This article first appeared on StrategyMeetsAction.com and is reprinted here with their permission. Opinions expressed in this article are the author's own.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.