Insurtech in 2021: A journey of reinvention
What technology trends are the insurance industry embracing to be ready for the future?
The pandemic has had a dramatic impact on the insurance industry, with 99% of insurance executives reporting that it created an unprecedented stress test for their organizations, according to Accenture research. It quickly exposed inflexible working arrangements and operations, fragile supply chains, poor data management and those not up to speed with evolving customer expectations.
Last year acted as a catalyst for rapid change, and insurers accelerated their digital transformations to meet the needs of a world in turmoil, compressing decade-long agendas into two- to three-year plans. Technology was a saving grace in an unpredictable time, enabling insurers to minimize the disruptions of the pandemic.
Consequently, creating and delivering value in insurance has drastically shifted, with the future of the industry now more predicated on technology than ever before. Insurers need to reimagine their businesses, both internally and externally, to meet the changing requirements of today’s customers, who are increasingly questioning the value of insurance products and services. Insurers also need to expand their offerings intuitively and in partnership with others. At the same time, customers are facing new risks to their livelihood, health and wellbeing.
Leading in an uncertain future will require insurers to become skilled at change and reinvention, with future-ready technology and operations, along with digital leadership to unlock and deliver new value. This journey has only just begun, and to emerge as leaders, insurers need to start building what comes next, reimagining everything from their people, data, architectures and ecosystems.
So, in this rapidly changing world, what technology trends will insurers need to address to be positioned as leaders? Accenture’s Technology Vision for Insurance 2021 report revealed the following five strategies that insurance organizations need to adopt for future success.
1. Stack strategically
Over the past few years, the level of focus on enterprise architecture has ebbed and flowed in the insurance space. However, given the explosion of powerful new technology platforms and the pace of change, it is now the most important moment in history for enterprise architecture. Nearly 80% of insurance executives surveyed stated that their technology architecture is becoming critical to the overall success of their organization.
This is an opportunity and a threat as building on technology platforms that are not durable will only create the next generation of technical debt. Establishing a strategic stack and a culture of continuous evolution is critical.
A new era of industry competition is dawning — one where insurers can build their stack to drive efficiency and better serve their customers. Now is the time to strategically design your stack to harness the cloud, leverage artificial intelligence (AI) and take advantage of next-generation infrastructure. The architecture built today will determine each insurer’s future.
2. Mirrored world
Growing investments in data, AI and digital twin technologies are giving rise to an emerging era of business and intelligence — the mirrored world.
It could be said that insurance was an early pioneer in the mirrored world through its use of actuarial science to model potential risk scenarios. Yet insurers have only just begun to tap into the renewed potential of digital twins, recognizing that the opportunity is exponential as a new, worthy source of intelligence that could enable insurers to gain better insights into complexities and model their organization’s processes, people and assets.
While it may not be a fully developed strategy at present, 87% of insurance executives agree that digital twins are becoming essential to their organization’s ability to collaborate in strategic ecosystem partnerships, and 68% expect their organization’s investment in intelligent digital twins will increase over the next three years.
3. I, technologist
Natural language processing, low-code platforms, robotic process automation and more are democratizing technology, putting powerful capabilities in the hands of people all across insurance businesses.
Automation tools are configurable by the business users without central IT teams. Now, every employee can be an innovator, optimizing their work, fixing pain points, and keeping the business in tune with new and changing customer needs.
As insurers focus on aligning their businesses to a rapidly changing world, this real-time, on-the-ground input is crucial. In fact, insurance executives rated above the global average on their prioritization of technology democratization, with almost all (91%) stating that technology democratization is becoming critical to their ability to ignite innovation across their organization.
4. Anywhere, everywhere
The year 2020 saw the biggest workforce transformation in living memory — 77% of insurance executives surveyed agreed that, due to COVID-19, their organization’s employees faced the largest and fastest human behavioral change in history.
Leaders made drastic moves to keep businesses going and employees safe during the pandemic, sending their people to work from home and doubling down on technology solutions to keep them productive.
Insurers have been historically reliant on a physically present workforce, but that has changed dramatically. Remote work is here to stay, and it’s time for insurers to transform this into an advantage.
5. From me to we
Rapid digitization during the pandemic has paved the way for insurers to rethink partnerships. Leading insurers will reimagine their partnerships through ecosystems and multiparty systems, eschewing the industry boundaries of the past.
The future of insurance lies in collaboration, and 90% of insurance executives agree, stating that multiparty systems will enable their ecosystems to forge a more resilient and adaptable foundation to create new value with their organization’s partners.
Leaders in insurance are adopting future-ready technology architecture to share/consume ecosystem partner APIs and incorporate insurtech services into their value chain for faster distribution, underwriting and claims operations.
The new insurance reality
While it will be tempting for companies to retreat to what they know, the past 18 months have brought the need for a different path forward into clear focus. Insurers must have a clear-eyed perspective and a sharp focus on their expedited digital transformations while moving from a reactive state of risk indemnification to a proactive mode of ongoing risk mitigation. To drive this change, insurers will need to lead the way through unchartered waters, radically rethinking their role in the customer value chain and making crucial changes to their technology and operations to support this new reality.
Steve Murphy is the global technology lead for Accenture’s insurance industry group.
Opinions expressed here are the author’s own.
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