The insurance industry is full of hypothetical crystal balls gazing into the future. Predictions of intermediating robots selling policies and human microchips feeding data to blockchain-supported underwriters are two possible innovation blasts being thrown into the mix – but they’re likely to take some time to materialize.
In the meantime, there’s enormous amounts of technology innovation being tried and tested in the insurance world. Global management consulting firm Accenture is keeping on top of these trends. Insurance Business caught up with Sharad Sachdev, managing director and analytics lead in Accenture’s Insurance Strategy Practice, to find out what innovation trends he expects to emerge in the near future.
“One of the next big trends we’re all working towards is augmented reality,” Sachdev said. “We’re already seeing insurance companies starting to test augmented reality in the ways they operate.”
Augmented reality is on the spectrum between virtual reality, which creates immersive, computer-generated environments, and the real world. It will enable insurers to enhance reality with graphics and other computer-generated interactive tools. This has the potential to boost customer experience levels and improve efficiency throughout the insurance value chain.
“Augmented reality will allow companies like Lemonade to operate very effectively without having a massive workforce,” Sachdev added. “Today, Lemonade doesn’t have 10,000 people on the ground. The question is: can augmented reality give them an operational advantage without having those 10,000 people? I believe it can.”
The next big trend Sachdev has become aware of is the use of quantum computing, which could open up new data sets and provide insurers with a new approach to processing information.
“Quantum computing is going to change the game in terms of the way insurance companies carry out very complex calculations,” Sachdev told Insurance Business. “I think it’s going to be particularly relevant in the world of actuaries. Only time will tell how the industry will grow to use it in other ways.”
We don’t need a crystal ball to know that augmented reality and quantum computing could have significant futures in the insurance industry. Technology start-ups and insurtech firms are already creating solutions and platforms around these ideas. As these new firms make progress, incumbent insurers are actively prospecting consolidation opportunities.
“We’re already seeing big insurance firms acquiring small innovative start-ups. The thinking behind this consolidation is very simple – that company could offer us a competitive advantage and we would like to have that competitive advantage for ourselves,” Sachdev said. “That trend is absolutely going to continue into the future.
“An interesting thing to look out for would be if any of these insurtech start-ups become so big that they become the go-to industry platform. Imagine what could happen if a small consortium of regional firms decides to support a certain class of insurtech, enabling it to scale beyond typical consolidation size. The only option left after that is for insurance firms to participate and partner with the insurtech. That’s how industry platforms get created – and we could see more of that in the future.”