Digital Economy Outlook 2016 – BBVA Research

Article Synopsis :

The term ‘digital’ means different things to different people. Insurance executives worldwide are asking: What does digital mean to us?

This article explores five trends shaping the digital future of insurance

To help in this respect, BBVA’s “Digital Economy Outlook 2016” rounds up five digital trends shaping the digital future of insurance: 1) cloud computing in the EU (amid a fragmented regulatory framework), 2) the impact of technological advances on the labor market, 3) the digital divide, i.e., an analysis of asymmetries in Internet use, 4) InsurTechs and the disruptive insurance ecosystem, and 5) virtual assistants and AI at your service. More detail as follows:

1.     Cloud Computing in the EU amid a fragmented regulatory framework:

Cloud computing is a technology enabler. It allows for cost reduction, flexibility, scalability and better use of IT. Slowing its usage is the lack of regulatory harmonization. There is need for a common framework for cloud computing regulation across the EU and, ultimately, the globe.

2.     The impact of technology on labour markets:

Technology automates routine tasks. Increased computing power, improvements in artificial intelligence and full-scale development of the Internet of Things will no doubt displace workers. But technology will also result in the creation of more complex indirect jobs. The future of the labour market will be shaped by technology. The time to start talking about it is now.

3.     The ‘digital divide’ and development:

Information and Communication Technology (ICT) is being promoted and propagated at different speeds in different countries. Country readiness in terms of infrastructure, digital content, prices and public education along with improvements in political, regulatory and business environments are crucial for digital and, arguably, human development and expansion.

4.     InsurTech and disruptive insurance ecosystems:

Growing competition from start-ups and (non-insurance) technology giants has started exerting pressure on traditional insurance companies. Disruptors are more customer-centric and, as a result, pose a major threat. Innovative solutions introduced by these new players are forcing carriers to rethink long-standing business models and  strategies

5.     Virtual assistants and AI:

Virtual assistant (VA) technology (e.g. Siri, Echo) is entering the mainstream. VAs change the way we interact with businesses and services. The potential of VAs is immense with the VA market expected to grow from $1.6 billion in 2015 to $15.8 billion in 2021. By 2019, VAs will be used as a primary interface by at least 25% of households in developed countries. To tap this potential, insurers need a better understanding of the data and usage patterns, hence building their “intelligence” quotient with respect to VAs.

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