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This blog by Mike Key posted on the Digitalist on July 13th, 2016

For insurers, new technology offers opportunities not possible just a few years ago. These new technologies offer insurers more data and more access to customers.

In return, insurers can leverage this information and technology to transform whole business models and business processes. With innovative thinking insurers are able to better assess risk and provide appropriate coverage.

Bonus: Download the white paper “How Insurers Can Prepare for the Digital Revolution” to learn more about what digital technology has to offer.

It’s critical to understand technological changes driving innovation today. These changes are adding more connectivity among people and things than ever before.

It’s within this connectivity that insurers can find the opportunities for future growth.

Digital drivers and disruption

This technological change has several key drivers forging innovation in many industries. Here are five trends that are driving digital transformation.

  1. Hyperconnectivity is perhaps the most crucial new driver. Today, the world’s objects and people are more connected than ever before. The rise of the Internet of Things, a complex network of objects outfitted with sensors and software, is changing how we work and live. Using wireless connectivity, these objects can connect with people and other objects. The tools allow objects to read, capture, send, and collect data. This data includes information on performance, usage and needed maintenance.
  2. Supercomputing is a second factor for insurers to consider. In-memory and networked computers allow for the collection and analysis of information in new ways. For insurance companies, this means having actionable insights on large data sets in minutes or hours instead of weeks or months.
  3. Cloud computing is another new driver. With information accessible on multiple platforms by users the world over, access and use of data is better than ever. For insurers embracing a digital model, cloud computing speeds up the timeframe for using new business models. Like in other industries, cloud computing allows for cost savings and resource reallocation to more critical needs.
  4. The smarter world in which we live means we are always connected and always capable of sharing information. This becomes helpful to insurers by creating pricing models based on recorded behaviors. As the Internet of Things and powerful computing become the new normal, the use of the collected data opens new possibilities.
  5. Cybersecurity is the final major disruption. Keeping data protected means insurers need new tools like multifactor authentication, biometrics, and behavioral analytics to remain one step ahead of hackers and other attacks, both physical and virtual.

Assessing and covering risk

Better information allows insurers to more accurately assess risk, which in turn allows for better coverage options. With an always-connected world, insurers can provide a new array of products and services.Let’s look at some of the areas of connection and how they relate to insurer opportunity.

Connected cars and fleets

With sensors installed in vehicles, driving behaviors can be analyzed in real time. Information on accidents and breakdowns is more available.By tracking driving performance, risk selection and prevention are optimized. Insurers can offer “pay as you drive” coverage pricing that includes discounts, incentives, and fees for behavior. Individualized coverage options lead to more profitability.

Connected homes and buildings

Connected sensors and monitors keep buildings and people safer than ever. Cameras and sensors can detect intruders, smoke, fire, carbon monoxide, water problems, and other risks. Collected data gives insurers more information about risk. Connectivity lets insurers provide more concierge services in crises and emergencies.Insurers gain in two areas: improved loss ratios and better customer satisfaction in moments of need.

Connected health and lifestyle

The growing use of wearables and connected devices give users more investment in their health care. Insurers can better analyze behaviors and usage and offer better information on individuals and groups. This actionable information helps with patient care and better management of chronic illnesses. For insurers, there are fewer claims and payouts.

Connected economy and new alliances

There are ample opportunities for better partnerships due to these technologies. Insurers, providers, sensor makers, and users can develop new collaborations. By sharing data and creating synergies, insurers can find new revenue streams. In turn, insurers can gain market share and profitability.

Shifting strategy

The technology is here and evolving. Estimates put the number of Internet users worldwide at 3 billion by 2020. Similar estimates put the number of objects in the Internet of Things at 30 billion to 50 billion.For insurers, it’s time to seize on these opportunities and the industry is moving in that direction. A study by Tata Consultancy Services showed that 80 percent of companies that invested in the Internet of Things increased revenue as a result.A KPMG International survey of insurance leaders showed that technology is front of mind for many executives.The survey asked for the top three opportunities over the next two years. The top three responses all spoke to the integration of technology:

  • 60 percent listed improving operational processes via technology
  • 52 percent noted using digital technology and integration in business objectives
  • 48 percent mentioned using consumer data analytics to improve underwriting, pricing and marketing


It’s clear that the need to innovate is critical for insurers wanting to thrive. Digital technology is leading the way in this innovation. Insurance companies that seize on the opportunities this technology provides are well positioned for a digital future. Insurers need to embrace these technologies and the information they provide to gain better insights that will lead to more profitable product offerings and better decision making.