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On People, Platforms, and Predictable Disruption

A recent report from Accenture provides an interesting synopsis of trends in the insurance and technology world, including some extremely important insights on the role that intelligence (real, not artificial) will have to play in order for insurers to stay viable and actively manage what Accenture calls “predictable disruption.”

This Year’s Vision is “Predictable”

This year’s edition of Accenture’s annual Technology Vision for Insurance – titled People First: The Primacy of People in the Age of Digital Insurance – is based on a survey of 445 senior insurance executives in 15 countries. The short summary of the results is that “90 percent of carriers anticipate that the pace of technology change will increase rapidly or at an unprecedented rate over the next three years.”

However, as with last year’s report (see our comments here), the real meat is Accenture’s interpretation of the needed response to technology-driven disruption.

A.I. Goes Mainstream …

Accenture believes there are several pivotal developments, including Artificial Intelligence (AI). The authors write:

Rather than just being looked at as an add-on, AI now represents a foundational layer of IT architecture. Enabled by today’s vast amounts of data, cheap storage, scalable computing, and advanced data science, new tools allow machines to become more sophisticated in how they learn and make decisions.

From the interviews, Accenture finds that 82 percent of organizations plan to use AI solutions “more extensively,” while a further “73% aim to leverage video analytics and 75% are investing in machine learning.”

Platforms Form the New Economy …

Rather than buying core systems and running package or bespoke software, Accenture sees digitally driven insurers adopting a ‘platform’ business model.  Accenture says:

a platform can be loosely defined as a technical architecture, a governance model, and a set of technology services to enable the creation of industry-specific applications.

The report notes that the technology supporting these services – typically provided by large tech companies such as Amazon and Salesforce.com – allow for flexibility and rapid implementation, making it appealing in a dynamic business environment.

Predictable Disruption

There is a downside to platforms – and other technologies. The ease-of-use to start using an insurance platform for a new line of business is not restricted to insurers.

Having another organization – or the owner of the platform – utilize the services and the ecosystem to compete is potentially disruptive.  And this is very predictable, but only if the insurer can maintain a clear view of the strategic landscape.

This is where the human factors become critical.

A Liquid Workforce …

As new technologies bring in sophisticated technologies such as platforms and AI, Accenture says:

Insurers need more than the right technology; they need to harness that technology to enable the right people to do the right things in an adaptable, change-ready, and responsive liquid workforce

This is likely harder than we think.  Over the years, we have learned that we need good business analysts and user sponsors, but this is different.  The environment Accenture describes is far more dynamic and the impact more significant.

And we do not have a lot of folks with the appropriate skills.  Accenture notes:

Insurers are struggling to attract top young professionals—only 2 percent of recent graduates in the US express interest in working in an insurance company—and they face competition from other industries for digital and entrepreneurial skills.

There is Another Layer

In addition to the functional demands (making things like platforms, analytics, and big data work), insurers have to worry about strategic elements, such as business model disruption.

Back to platforms.  If an insurer just buys in as a user, the functionality and, possibly some portion of the data may be common to all users of the platform.  To create a strategic advantage, the insure could take a financial position in the platform.

Accenture comments on the value: “Whereas many insurers look at short-term monetization, the platform economy is about investing to be an early mover positioned for exponential growth as the network effect kicks in.”

Are We Ready? 

From where I sit, a handful of large and mid-sized insurers are getting serious about going digital, and getting the required people. However, the majority are still at the wait and see stage.

For the latter, it will be a challenge to get a critical mass of people who could fit the profile Accenture has defined. I’d be interested in your comments.

As an aside, we are planning our 2016 Insurance-Canada Executive Forum with a focus on customer experience as well as a look at technology and people challenges.

 

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