"The big question about the future of the industry is how the next wave of advanced technologies will alter the nature of insurance itself," says Mark Breading at SMA. (Photo: Panchenko Vladimir/Shutterstock)
Disruption is happening in every corner of insurance, but has the industry witnessed true transformation yet?
Not quite, says Mark Breading, partner at Strategy Meets Action (SMA) and author of SMA's report, "Insurance 2030: How Technology is Transforming the P&C Landscape."
"The so-called disruption touted by InsurTechs and others has not hit full force," he says, "but there is a coming tsunami of change that will be driven by outside forces."
Artificial intelligence, machine learning and the Internet of Things have already penetrated insurers' technology strategies, but new technologies are poised to transform the current risk landscape by offering novel ways to reduce risks, and, in some cases, revealing new risks, explains Breading.
While the industry is currently experimenting with new technologies, products and coverages, questions mount in the minds of insurance executives who wonder what the insurance business will look like in the future. Changing demographics and societal changes are also expected to change the business on a fundamental level. "The insurance industry is likely to look very different in 2030 than it does today," he says.
Although there is no magical way to see what the future truly holds for the industry, questions around how the next wave of technology will impact the business can be used as an effective planning tool to prepare for future scenarios.
The report recommends insurance companies take the following actions in order to accelerate transformation and position for the future:
- Scenario planning: Whether it is short workshops or longer projects, planning can be used to identify high-level insights, gaps, and watchpoints or develop full-fledged scenarios and detailed strategic plans.
- Actively follow transformational technology: Technology advancements happen at a rapid pace. But with 15-20 key technologies that insurers need to follow, monitoring can be a challenge.
- Enhance competitive monitoring/track use cases: Track innovation both inside and outside the industry, and even track innovation beyond geographic boundaries. Tracking insurer implementation of new technologies, products, and business models provides important competitive intelligence and ideas.
- Develop a transformation roadmap: Rethink roadmaps to blend the outside-in and inside-out approaches to transformation. Also, recognize that roadmaps need stable components that serve to build out the necessary foundation while adapting to market changes and opportunities.
So, what will insurance look like in a decade? "We humans have proven to be bad at predicting the future. However, in an era of rapid change, successful companies are those that create a culture and an infrastructure that is adaptable, enabling them to seize new opportunities as the world changes," Breading says.
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Heather A. Turner
Heather A. Turner is the managing editor of ALM's NU Property & Casualty Group. She can be reached at [email protected].
