IBM: Insurance on the platform

Executive summary 

The insurance industry has never been famous for rapidly embracing change. As recently as last decade, a researcher proposing simplification of U.S. insurance regulation wrote that “the [insurance] industry has not introduced a single entirely new property and casualty insurance product for individual customers” since 1959. Even today, innovation generally is viewed as incremental changes to business as usual. As the chief operating officer of a Canadian insurance company recently stated, “remarkable change can occur without ever really changing the core coverage of the product.”

Insurance is going digital – you can bank on it…

Yet to the industry’s credit, the narrative has been shifting. Insurers are actively discussing strategic innovation at large-scale industry events such as the Connected Insurance conferences or Insurance Innovators Summit events. And many insurers are increasingly committing their strategies and real-world initiatives to customer centricity, digitisation, and innovation.

For example, Switzerland-based Zurich Insurance Group addresses all three areas in its annual report, where it outlines a high-level strategy: focus on customers, simplify, and innovate. One of the resulting initiatives was the creation of a new unit, Zurich Customer Active Management, to provide analytics support. This unit uses artificial intelligence (AI) to generate insights from customer data and interactions. These insights can be used to create proposals and solutions specifically tailored to the customer, identify next best actions, and generally improve the customer relationship.

The industry’s recent strategic shift is an overdue reaction to the building pressures insurers face due to changes in the competitive environment (see Figure 1). On one side, customers – especially the younger generations – expect insurers to offer highly personalised products that complement their digitally orientated lifestyle. Many customers are renting instead of owning, and they expect protection – not insurance – to be part of a larger package.

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