To remain competitive in the market, insurance providers must take a proactive approach to helping customers manage risk through technology-enabled “insurance-as-a-service” solutions, according to a report by SAP SE and analyst firm Ovum.
According to the report, ‘Technology Transformation in the Global Insurance Industry’, insurers must move to offer customers a product-based proposition based on more than just price. Instead, they must play the role of a comprehensive “risk manager”, providing services and solutions based on consumers’ individual needs and preferences.
The confluence of digital transformation, cloud and the Internet of Things (IoT) will drive this shift over the next five to 10 years. Far from just driving change, they enable many new capabilities by insurers.
For example, by capturing the huge volumes of data generated by digital technologies to predict risk more accurately, insurers can use the information to alert customers to potential problems in advance, thus becoming a “trusted advisor”.
IoT technology such as embedded sensors, telematics and home automation can provide data that can be used to allow individual policyholders the autonomy to create their own customised policies based on the level of risk they present. Car insurance policies, for instance, could carry premiums that increase when the car is driven, and decrease when the car is parked.
The expanding use of cloud architectures could also enable insurers to respond more quickly to customer demands and needs by introducing new features and functionality.
“To fully exploit the opportunities presented by these technologies, carriers need to view them as core parts of their business strategy,” said Charles Juniper, principal insurance analyst, financial services technology, Ovum Research. “Digital transformation, cloud and IoT all play an important role in creating a seamless experience that provides added value to customers. It’s this added value that will make insurance carriers a more active, valuable participant in their customers’ lives and help them to compete against new market entrants.”
