According to the findings of a new IBM (News - Alert) study, insurance executives see three factors as most important to the future of the insurance industry: technology, regulation and market factors. In terms of technology, 71 percent of insurers indicate they have begun using cognitive technology to better prepare for the future.
The IBM Institute of Business Value (IBV) study, “Insurance 2025: Reducing Risk in an Uncertain Future,” was commissioned to explore the likely growth of the insurance industry over the next eight to 10 years, with a goal of highlighting the steps insurers should take over that time.
Nearly 80 percent of surveyed insurance leaders reported that technology will have a major impact on their organizations. Insurance companies reportedly used to think of technology as a tool to cope with changes in markets and changes in regulation, but this study seems to indicate that insurers have been making technology integral to business models. As an example, the IBV study explores the potential impact of new technologies, including autonomous cars and connected refrigerators, and the ripple effects they will have on a number of industries, particularly insurance, when they become more mainstream.
“When considering the insurance world of 2025, we view the potential impact of cognitive technology to be very high, but the exact nature of how it will be implemented is uncertain,” said Christian Bieck, Global Insurance Lead, IBM Institute for Business Value. “While adoption is relatively unknown we believe technologies like cognitive and IoT will provide competitive advantage and better future-proof leading insurers.”
The study identifies four critical “no-regret moves” insurance companies should implement now that will put them in a better position moving forward:
• As products move to “as-a-service” models, deconstructing and componentizing legacy systems will be required.
• Insurers need to collaborate in partnerships and memberships in ecosystems of “adjacent space” partners that are in relevant lines of business.
• Know where you need to be a leader and bring together technology, business capability and product investment.
• Create a culture that fosters innovation and design processes that enable innovation by streamlining internal innovation processes, with central funding and investment models.