Insurance disrupted – Deloitte Report
Article Synopsis :
The rate of technological change is accelerating so fast that our ability to understand the implications has never been so challenging—or important.
“Insurance disrupted through Exponential Technologies” from Deloitte focuses on five specific ‘exponential’ domains expected to disrupt, possibly upend, insurance markets moving forward:
- Artificial Intelligence & Analytics: cognitive capabilities that can augment or replicate human thinking.
- Advanced Robotics: next-generation robotics/automation technologies to work with humans.
- Networks & Sensors: increased speed, declining costs of computation, networking and sensing.
- Sharing Economy: an economic model that focuses on community and sharing.
- Digital Currency Economics: crypto-currency, mobile payments, and other economic innovations.
Specific use cases and real-world examples are presented in the following subject areas:
- The Rise of Conversational Chatboats: Companies have used chatbots for customer service for a number of years, typically to replace or assist live agents in call centers or as an alternative to point-and-click interfaces for customers visiting websites. Advances in cognitive technologies are making it possible to provide increasingly accurate and relevant automated dialogues. For example, speech recognition software has made advances in reducing word error rates, and machine translation has improved thanks to deep learning techniques. Improvements in speech and language processing technologies are making chatbots more capable, expanding their potential applications across the enterprise.
- Wearables and IoT: The global wearable market is up 17% this year and is expected to double by 2021. Insurers must shift the way they create product and pricing structures, lowering insurance costs for consumers, and reducing loss costs for themselves.
- On–demand Insurance: The gap between covering everything every time and covering precisely the risks faced at a certain moment in time calls for new types of insurance—products that are highly customizable and of micro-duration.
- Sharing Economy: The concept of ‘sharing’ surfaced over a decade ago. Since then it has disrupted many industries, including transportation (Uber), commercial real estate, and hospitality (Airbnb, VRBO). As people grow more comfortable with sharing, expect insurance startups built on the sharing concept, such as Lemonade, to build market share.
- Blockchain: Still in a very nascent stage, distributed ledger technologies (DLT) promise a level of transparency, agility, transactional integrity, security, and cost reduction that would be nothing short of revolutionary if and when fully realized. Industry consortiums are being formed to experiment with and learn about DLT.
- Robots: The digital revolution has come to finance. Automation technologies are challenging the traditional workforce and Robotic Process Automation (RPA) is becoming a top priority for insurance CFOs as the focus on cost and efficiency intensifies and traditional cost-reduction levers no longer seem adequate. Computer-coded, rules-based software that automates manual activities by performing repetitive rules-based tasks is helping carriers find exciting new levels of efficiency.
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Digital Insurer's CommentsEach of the five technologies identified and discussed in this report hold, on their own, the potential to disrupt existing insurance business models. As a result, they’re viewed by many insurance veterans as dangerous—not only harmful to the status quo, but too expensive and complex and risky to be tampered with. This is understandable.
If using these technologies for exponential operational optimization and cost reduction turns you off, then we recommend embracing the upside, toward exponential revenue growth, improved customer experience, and decreased time-to-value realization.
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