Nearly two-thirds of insurers expect wearable technologies to have a significant impact on the industry, according to a survey in Accenture’s annual Technology Vision report.
The survey of more than 200 insurance executives across nine countries found that 63 percent of respondents believe that wearable technologies will be adopted broadly by the insurance industry within the next two years, while nearly one-third (31 percent) said they are already using wearables to engage customers, employees or partners.
The insurance industry report, “Accenture Technology Vision for Insurance 2015—Digital Insurance Era: Stretch Your Boundaries,” highlights emerging developments in IT that will have a great impact on the insurance industry in the next three to five years.
Nearly three-quarters (73 percent) of insurers said that providing a personalized customer experience is one of their top three priorities within the organization, and half (50 percent) claim to already see a positive return from their investment in personalized technologies.
“While insurers have traditionally based their underwriting and pricing processes on a limited view of certain customer variables, emerging technologies such as wearables and other connected devices can help insurers break from their traditional business models and provide outcome-based services for their customers,” said John Cusano, senior managing director of Accenture’s global Insurance practice.
For instance, he noted, one insurer, John Hancock, recently began providing new policyholders with a free fitness band to track their health progress— and then reward their healthy living with a reduction in life insurance premiums.
Data Struggles
However beneficial the data is, access to large volumes of new data is also causing insurers some challenges. The survey found that most insurers struggle to fully use their existing data. More than half (56 percent) said that managing data is “extremely” or “very challenging” considering the changes in volume, variety and velocity. At the same time, nearly nine in 10 respondents (86 percent) said they believe that software intelligence will be integral to simplifying their IT function.
The Accenture insurance industry report says that as the “intelligent enterprise” is making machines smarter and embedding software intelligence into every aspect of its business, these machines can help insurers get more value out of the scale of information in big data and discover associations among the data that an individual might not be able to make. The survey found that two-thirds (66 percent) of insurers experiment with intelligence technology, and three-quarters (76 percent) said they believe that successful businesses will soon manage employees alongside intelligent machines.
“Companies are starting to recognize the value provided by advances in language processing and speech recognition, which are making it easier for people to interact naturally with technology and machines,” said Thomas Meyer, managing director of Accenture’s Insurance practice in Europe, Africa and Latin America.
He said insurance companies will benefit from human and technology collaboration, “with workers leveraging new technologies such as wearables to augment their abilities and help them make better decisions.”
Innovation
The Accenture report also discusses how insurers are taking part in innovation initiatives, using application programing interfaces (APIs) to exchange data, and leveraging technology platforms to deliver better outcomes to partners and customers. Three quarters (75 percent) of insurers surveyed said that industry boundaries will dramatically blur as platforms reshape industries into interconnected ecosystems, and the same number (75 percent) said they believe the next generation of platforms will be led by insurance players, not technology companies.
In addition, insurers plan to engage with business partners on digital initiatives in the next two years. Half the respondents (51 percent) said they plan to partner with major digital technology and cloud platform leaders, nearly two-thirds (64 percent) plan to engage with new digital partners within the insurance industry, and 45 percent aim to find partners outside the industry.
Cusano said platform-based ecosystems are the new plane of competition and insurers will have to decide whether to create their own, partner, or join an established ecosystem.
The Accenture insurance industry report is based on 221 respondents from insurance companies across the world. Respondents were mostly C-level executives and directors, with some functional and line-of-business leads, at companies with annual revenues of at least $500 million, with the majority of companies having annual revenues greater than $6 billion.