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11 January 2017 by Charlie Penwarden

Top Digital Initiatives That Will Impact The Insurance Market In 2017

Top Digital Initiatives That Will Impact The Insurance Market In 2017

The speed of digital innovation is increasing year on year. What was thought impossible in 2015 is now coming to fruition. So what does 2017 have in store for digital innovation and transformation? We look to give you our own thoughts looking ahead.

AI

Artificial intelligence – embedding human intelligence into machines, enabling systems to learn, adapt and develop solutions to problems on their own. Michael Costonis, Senior Managing Director of Accenture Insurance states that “Within five years, automation driven by AI will be seamlessly embedded in every aspect of the insurance business”. Data is being produced at an uncontrollable and radical rate from connected devices, machinery and vehicles – no human could sift through all of the numbers and recognise vital statistics.

Machines will take over the mundane jobs, including asking routine questions, submitting requests, filing paperwork and even talking to customers – as machines grow in intelligence, they provide efficiencies and new levels of insights for the insurance industry. As a result, improving customer experience as advisors spend time creating value-added services instead – although personally I find this debatable – even if the experience is quicker, who really enjoys talking to a robot? However insurers with AI capabilities have a distinct competitive advantage with the ability to appreciate real-time behaviour of prospects and analyse changes in market forces and react appropriately.

Internet of Things

The total IoT market is estimated to grow from £126.56 billion in 2016 to £533.38 billion by 2021. Imagine the fridge in a flooding home alerting the burst pipe to turn off – then alerting the family, the neighbour, the utilities company, the insurance company and a drone all in one go? 2017 is the year where devices will start to communicate with each other and help each other make decisions.

Chatbots

Chatbots are under the “AI umbrella” and are single-handedly making their mark on the industry. With the ability to provide 24 hour support, real-time feedback and insurance consulting, chatbots are helping to improve customer service.

The age of apps are over – the average person only uses 5 of their downloaded apps regularly and with storage limitations on devices, they just aren’t needed. Chatbots ensure that engagement with insurers continues despite this downwards trend, as they do not need an app to work. A great example is Spixii – a chatbot which behaves like an online conversation with a real-life insurance agent – showcased in the image.

The growth of chatbots in the insurance industry is inevitable in 2017 and is further supported by Facebook’s latest change to its messenger platform enabling any company to develop and deploy chatbots directly to their target market. The next stage of chatbots will be intelligent objects having some form of conversational interface – a market which is estimated to hit £500 billion by 2020 – but we’ll discuss that in next years view of 2018!

Collaboration

This year the world’s biggest insurers committed more than $1bn into investing in technology start-ups in an attempt to boost their own digital services and profitability. These start-ups are becoming well-known for prioritising customer experience and larger insurers are learning to collaborate and support one-another.

This trend is set to continue into 2017, however interestingly enough, the investment in 2016 wasn’t necessarily with insurance focused startups. Instead firms partnered with external start-ups which could add value – for example Aviva has invested in Cocoon, a home security business whilst Axa has backed a start-up which forecasts the price of airline tickets. Keep an eye out for the key strategic partnerships this year.

Ability to turn insurance cover on and off

The rise of on demand insurance cannot be denied. Millennials want it, and are willing to pay for it! Linking to our previous point, insurers are looking to connect with start-ups who provide on-demand coverage for ride-sharing drivers and home-sharing owners.

The demand for convenience has seen a trend in car insurance that does not need payment when the car is not in use and pay-as-you-stay home insurance. One company leading the market includes Cuvva, who insure car from the moment it starts driving until it reaches its destination.

Cyber Insurance

Cyber insurance is becoming the “must buy” for 2017. Increase hacking and attacks is making this a vital priority for large corporations. It’s forecasted that cyber insurance premiums will grow globally from $2billion annually to over $20 billion in the next decade.

The aim is to ensure that purchasers understand the value of cyber insurance – something which is said to be lacking. This can be solved by using data analytics to try to anticipate attacks or address them as they are happening – showcasing their real value in prevention rather than cleaning up after the attack.

Aon has recently created a Cyber Risk Management Advisory Group with over 550 employees to push this initiative.

References:

Costonis, Nov 16:  http://bit.ly/2fxLk7t

Cognizant, Jul 16: http://cogniz.at/2fLuQ0x

Bort, Oct 16: http://read.bi/2ewn3xR

CB Insights Mar 16: http://bit.ly/2fPNjcv

FT, Jan 16: http://on.ft.com/2eiKP4X

Beauchamp, Jul 16 http://bit.ly/2efuWMC

Huckstep, Apr 16 http://bit.ly/2fy2jGI

Ventureclash, Jun 16: http://bit.ly/2fFma6Y

Boulton, Aug 16: http://bit.ly/2fgExC8

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