5 – Telematics

Although penetration for usage-based insurance products is still relatively low, SMA notes that insurers expect these products to "revolutionize" the personal-auto line within the next decade.

SMA notes that while the impact in the near term will be for private-passenger autos and commercial fleets, "telematics technology is applicable to many other lines of businesses." Insurers, SMA says, are already experimenting with UBI for homeowners insurance, and expect to expand the technology to inland marine, commercial property, workers' comp and other lines.

Challenges include the time from initial strategy to active program (three years or more), determining what device to use and what information to collect, and the transformation that must occur in products offered, marketing and sales, underwriting and claims.

Potential rewards include new insights into customers, improved underwriting profitability and more customer interactions, which could help build loyalty.

4 – Cloud Computing

Usage of the cloud is growing in the insurance industry, SMA says, but is still in the early-adoption phase. Additionally, SMA notes that cloud solutions so far have focused mostly on infrastructure services and non-core services.

"Only 33% of insurers are using cloud for core solutions today which would, by definition, include policy and customer information," SMA says.

But SMA says usage is expected to grow. Based on its survey, SMA says that, over the next 12 months, 44% of insurers plan to use the cloud for core services, while over half plan to use it for infrastructure services.

Challenges include insurers' concerns about losing control of their operations and concerns about the privacy of data. SMA says opinions on these issues are gradually changing with experience, with insurers finding that a well-designed cloud environment may be more secure than their own on-premises environment.

Potential rewards include opportunities for scalability and conversions. "the right cloud environment can help address a number of situations where an insurer needs capacity rapidly or where temporary capacity is required," SMA says. 

3 – Collaboration Technologies

SMA says insurers are looking into collaboration technologies to speed up interactions and eliminate delays, lack of information and challenges connecting customers to the right person. Chat sessions, real-time video links between agents and underwriters and wikis and forums that adjusters can tap into for expert advice on how to handle unusual claims are among the solutions insurers are already using or pursuing.

SMA says real-time interaction is the most advanced form of collaboration currently, with 67% of survey respondents already using or implementing remote screen sharing, 52% using video conferencing and 51% using chat/instant messaging.

According to SMA, content collaboration will be the next wave of mainstream adoption. Ideation and crowdsourcing remains a little further off, with just 12% and 5% of insurers using or implementing these technologies respectively and 66% and 68% saying they have no plans in these areas.

Challenges include figuring out how to truly integrate social-media technologies into a collaboration framework.

Potential rewards of accomplishing that task include opportunities to embed collaborative capabilities into every aspect of the business.

2 – Mobile Technologies

Insurers are trying to move beyond the early stages of mobile adoption, says SMA, noting that 81% of survey respondents plan annual increases in mobile investments for 2014 and 2015, with 30% planning to increase spending by over 10%.

But insurers have much work to do. In a September blog for PC360, Sam Friedman, research team leader at the Deloitte Center for Financial Services, said the takeaway from a trio of focus groups run on behalf of Deloitte was that insurers struggle to develop mobile apps that are relevant in consumers' daily lives, or that consumers are even aware of,

SMA says most insurers remain in a mid-range as far as their activity with mobile apps, while 13% report no activity in this area and 14% say they have rolled out a range of apps.

To Friedman's point, SMA says challenges for insurers include determining "what specific functions are valuable for customers, agents or adjusters."

Potential rewards include better serving a variety of constituencies, from employees, to agents, prospects and policyholders. 

1 – Analytics and Big Data

Forty-nine percent of insurers plan to increase spending in this area by over 10% in 2014 and 2015, SMA says, with analytics becoming "the best route to gaining a competitive edge" in the eyes of many insurers.

Insurers are already spending over $10 billion per year on data and analytics, SMA notes.

SMA says the two biggest trends it has observed are increased ownership by senior business executives and the recognition of data and analytics as an important discipline in its own right.

"As a result," SMA says, "many insurers are establishing organizational units with enterprise-wide responsibility for data and analytics."

Challenges include understanding the capabilities and aligning them to the range of technology tools to determine where and how analytics will create the most value, SMA says. "The other key challenge is the shortage of talent and analytics resources."

Potential rewards include opportunities to better understand customers, allowing insurers to design new products, underwrite and price risks more precisely, identify fraud and "generally improve every part of the business."