“It’s highly likely that the insurance industry will change more in the next 15 years than it has in the previous 100.”
Change is the theme for 2021. A bright future for the convergence of insurance and technology is the theme of this article, published in the February issue of Insurance Journal.
In the article, Andrew G. Simpson delves into the vision of Mark Anquillare, executive vice present and chief operating officer of Verisk Analytics where Angquillare says: “When we look toward 15 years from today to 2036, the landscape of insurance will look utterly different than it does today.”
What will differentiate insurance today with insurance in 2036? It’s a two part answer.
“In this future, nearly everything will be connected, contain smart technology, be mobile, produce data, and analyze in real time.” At the speed that technology is morphing customer experience with insurance claims, Anquillare sees changes in the models that steer the insurance industry. He sees a race between the traditional model of an insurer—familiar names and giants that are decades, sometimes hundreds of years old—and the technology companies of today and the future, who are championing the model of a fully connected and integrated insurance ecosystem.
The insurance industry has the challenge of complexity and a regulatory jungle that takes nuances to navigate through. The established giants downplay disruption in their models, believing instead that any new technology will be integrated into already existing structures. Tech companies are unfamiliar with the vast network of regulations insurance companies need to contend with. Insurance establishment maintains that what has worked for a hundred years will still work in 2036, as companies continue to pivot and adapt. In what Anquillare calls a race to build a better insurance ecosystem, it will be up to the consumer to determine the winner.
Key drivers of change in the next 15 years
As we have seen in 2020, disruption can come suddenly, and changes can take place rapidly. Anquillare believes the industry will change in the next decade and a half. A lot.
He cites three disruptors: global climate, people, and artificial intelligence (AI) technology. While we have known for decades that global climate change was in the works, today it is a major player. Records are being smashed, and profound changes are taking place that can no longer be ignored. In the next 15 years, weather events will be front and center to insurance industry considerations.
Second, the consumer profile is changing. Whereas boomers may find comfort in the old faithful insurance companies, Anquillare cites research that shows upcoming generations who have grown up with technology, are more likely to trust technology. And Big Tech excels in simplifying complex transactions and prioritizing customer experience. It will be a race to win consumer confidence.
Technology like artificial intelligence “has the potential to accelerate at amazing speed in the very near future,” Anquillare states. As innovation continues to increase in insuretech, disruption to traditional models may be inevitable. After all, he notes, other industries have already been disrupted, “think about music, network TV, travel, telecommunications, taxi service, newspapers…”
Some insurers still struggle with integrating technology. Anguillare cited a recent Verisk-backed study in which a number of insurer chief information officers said they were still using Excel spreadsheets to make underwriting decisions. Insurance providers who rely on those more traditional, manual systems usually struggle to achieve the same results as those who have automated and optimized their workflow. They don’t have the same control over what’s happening on a day-to-day and on a long-term basis, and they have to work harder to create the same level of relationships with customers.
How can today’s players in the insurance industry respond to the challenge from big tech?
Anguillare’s answer to big tech’s challenge is to throw down the gauntlet. Embracing technology’s advances and integrating it into the insurance landscape are a natural evolution. CEOs are taking leadership stances when it comes to technology, and Anguillare sees that as hopeful: “Few industries are better positioned for outstanding growth over the next 15 years.” Taking a long range look at 2036 can be insightful for insurance companies preparing for the future. “I think the models point to possibilities that can be highly helpful for us to consider, that can help us prepare for the future and to also do our part in shaping it because the insurance industry itself has a very bright future,” Anguillare said.
Some takeaways for insureds:
- Utilize automation to reduce costs
- Find the most innovative technology that exists now
- Make your digital experience friendly to customers
- Make sure your data is secure from threats
Examine the tools that technology can offer you NOW that will keep you ahead of your competition as we all speed our way towards 2036