Will Emerging Technologies and Innovation Transform the Insurance Customer Experience?

By Mark Breading, Partner, Strategy Meets Action

Toronto, ON (Aug. 24, 2015) – The world is abuzz with the potential of a new wave of emerging technologies to transform business, society, and our daily lives. Every day there are new developments in wearables, drones, autonomous vehicles, the Internet of Things, 3D printing, augmented and virtual reality, artificial intelligence, and a host of other technologies. The pace of change is quickening (or sickening) depending on your view. Ten years from now, or even five years from now, our world is expected to look a lot different. But here we sit in an industry that many consider stodgy, slow moving, and stuck in the past. Whether or not that opinion is warranted, it is important to ask how all of these emerging technologies are impacting insurance. Will the insurance industry look much different three years from now? Five years? Ten years?

Two of the key dimensions of the industry to examine in light of the rapidly changing, digital world, are the customer experience and innovation. Insurers have pivoted toward the customer, putting major investments and initiatives into action after years of slow progress toward becoming customer-centric. And despite the industry reputation, many leading companies are aggressively pursuing innovation agendas, seeking to reinvent their businesses. There is no doubt that many other aspects of insurance will change as well, including distribution channels, products, risk assessment, and business models… but one could argue that the major drivers of all of these changes are customer expectations, fueled by emerging technologies, and enabled by innovation.

First, it is essential to identify some of the most influential emerging trends and technologies and how they are shaping customer experience and giving rise to new opportunities. Second, it is vital to explore how the evolving world offers a true paradigm shift in the way insurers will interact with customers. Finally, it is key to understand the role of innovation in creating and implementing new, game-changing ideas.

Emerging Technologies and Trends

SMA research on twelve emerging technologies indicates that significant activities are underway related to these technologies, and many insurers believe there is high potential for innovation leading to industry transformation – not ten years out but as early as 3 years from now. Our research shows that insurers have a high focus on eight of the twelve technologies for the near term, while the rest are expected to impact the industry more substantially over the mid-term horizon. The top priority emerging techs today for both P&C and L&A are 1) new payment technologies 2) the IoT 3) wearables and 4) artificial intelligence.

P&C has an additional focus on drones and autonomous vehicles, while L&A is farther ahead in the use of semantic/cognitive technologies and is keenly following developments in biotechnology/genomics. Other technologies with a potentially big impact on the industry further out include 3D printing, augmented/virtual reality, gamification, and advanced robotics.

Paradigm Shift in the Customer Experience

Throughout history, the insurance customer experience has been based on conducting transactions and exchanging documents and correspondence. Often the annual number of interactions between a policyholder and insurer can be counted on one hand, especially if premium payments are automated. The advent of maturing technologies like mobile and analytics are already transforming the customer experience, offering new ways for policyholders to communicate with agents and insurers. However, as dramatic as recent changes might seem to some in the industry, the next wave of changes driven by emerging technologies and trends has the potential to completely change the experience. Is this just hype, or will the experience really be very different?

We believe that emerging technologies will completely change the customer experience due to three aspects of interactions.

  • Nature of interactions: The connected world is already offering new opportunities to collaborate with customers on managing their risks and investments. There will still be policy dec sets, renewal letters, first notice of loss reporting, beneficiary change requests, and other traditional sales or service transactions. True, the delivery method is shifting more to digital, but the production and assembly of these documents may not be that different. However, P&C insurers will increasingly have the ability to monitor the location, driving behavior, and mechanical functioning of insured vehicles on a real-time basis. Already, companies are offering portals to customers to track their driving patterns and characteristics, and identify ways to improve driving safety, optimize vehicle performance, and manage premiums. L&A insurers are beginning to offer wearable devices to their policyholders to monitor their health in exchange for reduced premiums and health advice. Commercial insurers are experimenting with the IoT, using devices embedded in machines and infrastructure that provide notice of impending failures, immediate reporting of accidents, and real-time data fed to loss control experts to analyze and suggest safety measures. In short, it is likely that the customer experience will now be largely influenced through collaboration via portals and mobile apps, with interactions using embedded displays in vehicles, homes, and business, and the wearables and mobile devices of individuals.
  • Frequency of interactions: Our prediction is that interactions between a policyholder and insurer will increase from monthly, quarterly, or annually to daily or multiple times a day within five years for many lines of business. The number of remote and mobile sensors, chips, and devices is increasing exponentially, connecting every type of physical object including human bodies. Real-time data is available to insurers to monitor, analyze, and act on – making timely suggestions to insureds that will contribute to fewer accidents, less damage, improved health, and better investment decisions. The ultimate transition will be from reporting on the status of transactions to partnering in communications to manage risk and wealth accumulation.
  • Intelligence of interactions: Real-time data, along with sophisticated analytics will enable interactions to be more intelligent, personalized, and actionable. True customer engagement will occur when every interaction is informed by the appropriate context, considering the relationship, location, prior interactions, workflow, and individual preferences.

These changes will not occur overnight, but the customer experience is advancing along all these dimensions and is likely to accelerate as companies seek market advantages. Insurers that can capitalize on emerging technologies to transform not only their products and operations, but the customer experience, will be positioned as leaders in the new era.

Innovation: From Ideation to Implementation

Many in the industry have interesting ideas about the opportunities and challenges for insurers created by emerging technologies and trends. As always, the difficulty is how to identify those specific business use cases for a given insurer that can be implemented and will yield a measureable improvement in company results – then how to prioritize among multiple ideas in a way that investments and resources are utilized most effectively. This is where innovation comes into play. Innovation goes beyond a few people thinking of a great idea, although the ideation process is certainly a vital first step. SMA’s definition of innovation provides a more expansive, end to end view of the process and the intended results:

  • “Innovation comes from a desire and a commitment to constantly improve, to think differently, and to envision and enact change.”

For innovation to truly drive transformation and success, it must go beyond the desire, thinking differently, and envisioning change. All of those are important and can be supported by new processes, cultural change, and new technology tools for ideation, crowdsourcing, and collaboration. But to move from ideation to implementation means that there must be that sustained commitment, emanating from the top of the business, that promotes and cultivates the projects and investments that will enact change.

It is a fascinating time to be in the insurance industry – full of opportunities, threats, and a changing landscape. Insurers should continue to leverage maturing technologies like mobile, analytics, and collaboration technologies. These can improve the customer experience and provide competitive advantages. But the real transformation is just beginning, with emerging technologies setting the stage and innovation playing a starring role. Ultimately, the winners in this new digital era will be those that embrace the opportunities to leverage new technologies to rethink and reimagine their products and business models and create brand new ways to interact with customers.

SMA Summit

SMA’s annual Summit provides a great place for insurers to consider the implications of innovation, emerging technologies, and the customer experience, including the central need to provide a strong, flexible foundation via modern core systems. This event is a unique opportunity to hear what insurers are doing to imagine, adapt, and innovate to become a Next-Gen insurer. For any questions or inquiries, please contact Mark Breading at [email protected] or 614.562.8310.

About the Author

Mark is a recognized expert in advanced technologies and their implications for the insurance industry. He has exceptional knowledge of the customer experience, analytics, digital content management, and maturing and emerging technologies. Mark can be reached at [email protected] or 614.562.8310.

About SMA

Exclusively serving the insurance industry, Strategy Meets Action (SMA) is an advisory services firm offering retainers, research, consulting, events, and innovation offerings to both insurance companies and solution providers. Learn more about SMA at