The Insurance sector is amongst the most susceptible to digital transformation-enabled change of all industries. At the core of insurance is the concept of risk-transfer (from an insured party to an insurance carrier), and the availability of more high-quality information about a risk, and enhanced analysis of that information, can result in more accurate pricing and a more efficient market overall. Concepts such as IoT allow insurance offerings to be extended to support new propositions (such as insurance for servitised assets) and enhance services in already-established markets (with, for instance, usage-based insurance and new types of parametric insurance). Artificial Intelligence can play a significant role both in automating processes (for instance claims processing), and also in terms of assessing risks at a level of granularity that might not have been feasible before.
Overall, we have identified nine key domains of change in the insurance sector that are enabled by digital transformation. We analyse these in more detail in our recently published report Digital Transformation in the Insurance Sector. The list comprises:
Collectively, the concepts listed above will bring significant changes to the insurance industry. Importantly, many of the concepts listed act to increase the efficiency of risk-transfer (from the insured party to the insurance industry) and so result in insurance premiums that are more closely aligned with actual risks for an insured party, and a decrease in overall risk for the insurance sector. Other areas from the list above (e.g., claims automation) are focussed more on enhancing the overall efficiency of operations in the insurance industry, and still others relate to new emerging opportunities for insurance services related to changes that are underway in different (non-insurance) industries.
From a technology perspective, the Internet of Things and Hyperconnectivity emerge as key drivers of change in the insurance industry, alongside Artificial Intelligence and the related technology Robotic Process Automation. Other key technologies include Data Sharing, Distributed Ledger, and Edge Computing. Human Machine Interface and Product Lifecycle Management make fleeting appearances in support of Claims Automation and Servitised Asset Insurance respectively.
Read more about digital transformation in the insurance sector in our recently published report Digital Transformation in the Insurance Sector.