In our first post, we looked at how macro trends are changing the insurance industry. However, this time we will take a deep dive into a key game changer in the insurance industry: technology.
Technology, namely the emerging era of the Internet of Things (IoT) is linking people, objects and processes together, creating an explosion of data that is radically altering the insurance industry and shifting its traditional expectations. And, Asia is taking the lead in terms of IoT implementation, according to a Forrester report.
Today, more than ever before, data needs to be effectively analysed and managed, opening up new paths for opportunity and also, risk.
Specifically, these vast streams of data, created by the IoT ecosystem, can now be used by insurers to transform the way they approach risk assessment and management of clients. Progressively, this data can also be used to provide value-added services to customers such as instant alerts regarding network or equipment failure or over capacity spikes due to weather.
While there are a host of technology game changers, below are the “must-know” and “up-and-coming” drivers that are generating huge amounts of data and impacting how the insurance sector will operate:
The App Economy: The app industry has taken the world by storm, however, it is also making a big bang in the insurance business. Apps will be used to increasingly monitor conditions, submit insurance claims and reduce the time an underwriter needs to assess a situation and make a determination. In the medical sphere, apps are acting as medical devices, helping to monitor patients or manage their conditions. What does this mean? Apps will act as a knowledge tool, providing real-time information, which is essential for the insurance industry.
3D Printing: What’s all the rage right now is of course, 3D printing: the radical object creation technology where the shape of the objects are formed through a process of building up layers of material until all of the details are in place. It’s forecasted to reach US$3.7 billion by 2015 and for the insurance industry that has far reaching ramifications. With 3D printing, the concept of premiums and monetary compensation now has to be rethought, as tools, devices or even homes can be reprinted with minimal cost. It may sound like a futurist concern, but these issues are alive in 2014. In fact, at The University of Southern California, a research team built a colossal 3D printer that can build a house in 24 hours!
Automated Cars: The Institute of Electrical and Electronics Engineers claims that autonomous vehicles will make up 75 percent of cars on the road by 2040. With this, the hope is that traffic-related risks will diminish. This said, the vehicle insurance in its present form will have to greatly adapt. In the near future, the whole notion of car ownership will change, as renting cars on an hourly basis could also become a viable option – and with that, one of the insurance sectors biggest markets will evolve dramatically.
Genomics: One of the biggest game changers is genomics, and that the price for DNA sequencing is rapidly decreasing, having profound implications for life-expectancy insurance. While legal and privacy issues will almost certainly arise, the rise in genome scans will shift how insurers calculate premiums.
Location based services (LBS): Location based services are already in the hands of insurers – and are beginning to pick up steam. In terms of determining claims, this data is gold for authenticating the process. LBS can help catch fraudulent claimants by determining that they were not where they said they were at the time of an accident, for instance. Or more constructively, can be used to determine underwriter claims for properties on the basis of proximity to significant effectors.
These are just a handful of game changing technologies. The rise of video, social, mobile, telematics and gaming will also play a critical role in the transformation of the insurance industry. And, it won’t stop there. With the constantly evolving internet, new technologies will evolve with it, transforming insurance day-by-day.
Interested to learn more? Check out our new whitepaper “Challenge to Change: The Impact of Technology“.