A recent survey on the future of the insurance industry conducted by ACORD has shown that increased sophistication in technologies like AI, machine learning, and the Internet of Things (IoT) is projected to have a large impact on the industry.
The survey polled a variety of different insurance professionals about their perspectives on the outlook for the insurance industry over the next 20 years. Throughout the survey, respondents identified the technologies, practices and strategies they believed would have the greatest impact on the global insurance sector in both the short and long term.
Going back to technology, respondents from the survey said that familiarity and proficiency with technology from the C-suite down will be increasingly important. Respondents also anticipated a rise in the technology vs. people skew in their organizations’ overall capability mix over the next 10-20 years.
Additionally, 52% of the respondents also named technology as the most critical capability/competency for the C-suite by 2040.
At the same time, nearly 50% of respondents said that they anticipate that their greatest long-term source of competitive advantage will be the way in which they leverage technological capabilities.
ACORD said that respondents expressed that operational efficiency and excelling in core insurance functions may not be the key to driving superior performance.
“Technological capabilities will be of critical importance to delivering a superior underwriting and claims experience, creating operational efficiencies, enhancing customer experiences, and leading in product development. While executing on core insurance functions will remain of paramount importance, this will rely more and more on thoughtfully leveraging the right technologies,” said ACORD CEO Bill Pieroni.
“Moreover, our analysis indicates that insurers will need to employ a composite strategy, executing across all areas in order to effectively compete in the future. Embracing technological capabilities and prioritizing digitalization will be essential in doing so.”
He continued: “The need for human talent and expertise in our industry cannot be overstated. However, we will see the focus shift toward familiarity and proficiency with emerging tech capabilities. Industry professionals with this skill set will continue to drive innovation and advancement across the ecosystem.”
ACORD stated that industry stakeholders also ranked their top technology priorities over the next two decades, with APIs being highlighted as the most important necessity for the near-to-medium term future with 24% of respondents naming it among their top three areas of focus.
Respondents also indicated that AI and machine learning capabilities will be even higher priorities in 20 years than in 10 years, with quantum computing doubling in importance over the same time interval.
Pieroni, concluded: “These results are right on the mark. Standardized data exchange via APIs is a critical enabler of transformation, while AI and quantum computing have the potential to prove truly transformative, across the enterprise, in the long run. These capabilities will have a material impact across stakeholders and the insurance value chain. Real-time data leverage and risk assessment will have dramatic impact on stakeholders’ ability to create value for shareholders and customers alike.”