Digital Future for Insurers – Milliman Publication
Article Synopsis :
A technology and data revolution is under way, will insurers be disrupters or disrupted? “Disruption or Innovation – A Digital Future for Insurers “ by Milliman surveys the changing technology landscape homing in on key threats and opportunities as food for thought for insurance executives.
Per the report, the three main threats facing incumbent insurers are, 1) New non-traditional competition from the likes of Google and Amazon, 2) Self-insuring product manufacturers (such as automobile OEMs, who have already said they intend to assume liability for fully-autonomous cars when they’re made available in around 2021), and 3) InsurTechs (where incumbents are hedging their bets investing over $1 billion in InsurTechs since 2015).
Traditional insurers such as AXA, MassMutual, and AIG have established VC funds to invest in technology and insurance startups. Others have gone a step further establishing innovative captive units for the development and implementation of digital technologies, a good example being Aviva’s “Digital Garage” in Singapore and London.
A facility with data is key. With rising connectivity and falling sensor costs the availability of risk-related customer data is exploding. Data and analytics are fueling new products and business models.
Though individual strategies vary, investments in digital talent and an organizational culture more conducive to innovation are required.
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Digital Insurer's Comments“New entrants are unshackled by the past” says this report. “And do not have legacy systems and historical ways of working.” While this is good news for new entrants what can legacy insurers do to make their organizations faster and more agile?
We can suggest the following four steps:
- Invest in digital talent with a focus on data analysis.
- Encourage experimentation and innovation in groundbreaking new technologies such as AI, Machine Learning and Blockchain.
- Invest in cybersecurity to ensure data security and privacy.
- Collaborate with startups who have niche expertise mapping to your evolving digital strategy.
If you were to rebuild your organization, starting from scratch, to serve your existing customer base, what would it look like? If you were a ‘new entrant’ operationally speaking, how would your operation be configured?
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