This preparedness will enable insurers to deliver anytime, anywhere convenience via a seamless multichannel experience, streamline operations, and reach untapped segments, says the study. Digital developments will also help insurers to enhance their customer profiling, develop sales leads, tailor financial solutions to individual needs and, for non-life businesses in particular, improve claims assessment and settlement.
However, there’s bound to be a threat to the existing order. While more than 60% of the insurance industry leaders taking part in the global CEO survey see more opportunities than three years ago, just as many (61%) see more threats. In fact, insurance CEOs see more disruption ahead than any other commercial sector. “The changing market will require considerable product and business model redesign. This won’t be easy, but it’s the new reality,” Jamie Yoder, PwC Global Insurance Advisory Leader, notes.
The report acknowledges that many insurers are investing in digital distribution. Some are even moving beyond direct digital sales helping customers with models like pay-as-you drive insurance. This has coincided with the proliferation of new sources of information and analytical techniques that are beginning to reshape customer targeting, underwriting, and financial advice.
According to PwC, as sensors and other digital intelligence become a more pervasive as part of the ‘Internet of Things’, savvy insurers can become trusted partners in areas ranging from health and well-being to home and commercial equipment care. In turn, digital technology could extend the reach of life and pension coverage into largely untapped segments such as younger and lower income segments by reducing costs and allowing businesses to engage with customers in more compelling and relevant ways.
The report suggests that a combination of big data analytics, sensor technology and communicating networks could allow insurers to anticipate risks and customer demands with far greater precision than ever before. The benefits could include not only keener pricing and sharper customer targeting, but a decisive shift in insurers’ value model from reactive claims payer to preventative risk advisors.
“The emerging game changer is the change in analytics, from descriptive (what happened) and diagnostic (why it happened) analysis to predictive (what is likely to happen) and prescriptive (determining and ensuring the right outcome),” Yoder says.
The good news is that many insurers are developing new business models. “Prescient companies are striving for a faster and more flexible, data-led iterative approach, similar to what many telecoms and technology companies use. Some of them also are working with reinsurance and investment management companies to create a new generation of health, wealth and retirement solutions”, notes the report.
According to the study, the pace of change will only accelerate in the coming years as new innovations become mainstream in areas ranging from automated driver assistance systems (ADAS) to crowdsourced models of risk evaluation and transfer.