Building blocks: emerging tech and the future of insurance

What insurance coverage looks like and how we engage throughout the insurance experience will be different over the coming decade. Forces such as changing customer behaviour shaped by COVID; regulatory burdens imposed by ESG and consumer data protection; flocks of new and unexpected competitors; and worsening climate and cyber risks are reshaping what the insurer of the future will look like.

 

Insurers are prepping their organisations for change. When we asked insurance business and technology decision-makers working worldwide about their 2022 business priorities, “strengthening their economic growth potential” was identified as a critical or high priority by all 131 respondents. The recipe for building a foundation for growth spans people, partners, processes and, of course, tech. That enabling tech spans artificial intelligence, low/no-code, robotics, APIs, Internet of Things (IoT), edge, 3-D printing and even lifespan lengthening epigenetic clocks. So, how will these technologies and others shape insurance offerings and experiences over the coming decade? Insurance will become:

• Greatly connected. IoT, edge computing, AI and latency-lowering 5G/6G networking puts digital and computing resources close to where data is consumed and exhausted. Whether it’s a software update for an autonomous vehicle, the wearables that keep workers safe and equipment operating at full capacity on construction sites or even a smart carpet that can detect and mitigate the claim of a water leak, connected tech will keep drivers and workers safer and anticipate, mitigate and even prevent claims. 

 

• Deeply embedded. Selling and using insurance is being mashed into other buying and using experiences, expanding distribution sales opportunities for insurers, often with a very low cost of sale. Long-time embedded insurance sellers include payroll processors such as ADP, while Intuit QuickBooks’s partnership with SimplyInsured provides group benefits to QuickBooks’s small business employers. Auto and tire manufacturers, telcos, petrol retailers, rental property managers and tech platforms such as Google, Apple, AWS and others are exploring insurance distribution adjacencies. 

 

• Increasingly automated. “Hands-free” and “touchless” are now the hallmark goals of insurance underwriting and claims. In conversations with more than 40 life insurers last year, we heard big goals of at least 75 percent straight-through processing of new life insurance underwriting decisions, with start-ups having even more aggressive ambitions. That goes for claiming, as well. Australian insurer Westpac turned to its workforce of software robots to immediately scale up its claims operations during the country’s recent widespread flood disasters. 

 

• More invisible. Data and analytics, AI, robots, sensors and others deliver high degrees of convenience for the insurance customer. And as the nature of engagements shifts from reactive to anticipatory, there’s danger ahead. Insurers will be challenged to remain relevant as they fade into a backdrop of a larger experience. Nicole Myers, Chief Underwriter at Ethos, nailed the challenge in remarks she made at the April 2022 InsurTech Hartford Symposium: “Positive friction is a really important dialogue for our industry. We’ve become obsessed with disappearing into the background, but financial decisions are perceived differently than impulse Amazon purchases.”

 

• Most immersive. Insurance innovation labs have produced plenty of augmented/virtual/mixed reality experiments, and some have turned into commercial offerings. US workers compensation insurer, Texas Mutual, provides its Safety in a Box virtual reality training solution to loss control and facilities managers to help reduce workplace injuries. And in the next step to all things AR/VR/MR, immersion experiences combine multiple senses – sight, sound, touch and even scent – to “trick” users with more realistic experiences that provide insights to help insurance staff develop empathy. 

---

By Ellen Carney, Principal Analyst, Forrester Research