How to achieve sustainable value creation for the future
“IoT, AI and quantum computing will transform the insurance industry over the next 20 years.”
Bill Pieroni, CEO of ACORD, a global standards body for the insurance industry, said in a speech to insurance executives at DXC Technology’s Connect Insurance Executive Forum in the United States in February 2023, presented a vision of the future. His views on the future are based on research commissioned by DXC and conducted by ACORD, which examined the long-term outlook for the insurance industry.
“We are setting the direction for the next 20 years and accelerating the future of the insurance industry,” said Ray August, head of software and business process services for the insurance industry at DXC, when introducing Pieroni. I was.
The aforementioned research reveals that the key to long-term competitiveness for insurers is “technological advantage,” or how they harness the power of technology, said Pieroni. Reported. In the survey, 45% of respondents cite the use of technology as a key to gaining a competitive edge over the next 20 years. In contrast, 27% of respondents cited the use of technology as a key competitive advantage in the near future.
However, in order to achieve sustainable value creation for the future, insurers must not only leverage technology, but also do everything at the same time: customer/channel management, operational efficiency improvement, product development, etc. is needed. “If you don’t push technology forward, you’ll end up with a trade-off between affordable price and not-so-quality, or great quality and high price,” Pieroni explained.
Technology advantage
Pieroni identified IoT, AI, and quantum computing as the top three technologies to watch.
- IoT — Over the next 20 years, the proliferation of very inexpensive IoT devices is expected. This means the emergence of large-scale data networks. Imagine wearable devices that influence workers’ compensation claims, devices that manage energy usage, sensors in your car or home, and more. “There will be tremendous innovation in underwriting and claims,” said Pieroni, as the data collected will report on actual activity in near real-time. “Insurance is an execution-based business. You set the price, you sell, you control the cost of loss, and you get a good return on your investment,” he continues. “IoT will transform underwriting and loss costs.”
- AI — AI is the only way to make sense of all your data. AI can be used for everything from cybersecurity, to communicating with customers and agents, to developing products, to configuring smart cars. “AI will transform the way we do things. Fortunately, it still takes a while so we have time to prepare, but some insurers have not looked to AI and it is too late. ,” said Pieroni. “Organizations with true operational capabilities that are forward-looking will build capabilities for AI.”
- Quantum Computing — Quantum computing provides exponentially fast processing, which is crucial for working with large amounts of data. Moore’s Law in conventional computing was about doubling processing power, but in quantum computing it’s about thousands of times faster. For example, let’s say you were in a car accident. The insurance company knows the accident wasn’t your fault and they know the damage was done. An insurance claim has already been submitted before the airbag inflates. And the insurance money may be credited to your account before the accident is resolved. “Quantum computing, combined with IoT and AI, will transform the insurance industry,” predicted Pieroni.
human resource needs
As technology becomes more important over the next 20 years, the insurance industry will need to do more to attract tech talent. “As an industry, we are not hiring enough highly skilled people,” argues Pieroni. Talent is already a major priority and is expected to become even more important. Nearly 70% of survey respondents said recruiting, developing and retaining talent is their top priority today. Twenty years later, this number has increased to 80%.
Retaining talent is important not only for solving problems, but also for innovation around opportunities such as better service to customers and agents, and more accurate pricing. The overarching goal is to increase productivity and reduce labor-intensive tasks.
Tech talent needs permeate every corner of the organization. Pieroni said technology expertise will be crucial at the executive level. CEOs with previous CIO experience are expected to be in high demand. “There are very few CEOs in the insurance industry who were previously CIOs,” Pieroni said, adding that “those CEOs are doing pretty well.”
security priority
As expected, security continues to be extremely important. All IoT devices and data pose security risks. Many of our survey respondents said cybersecurity and risk management are top technology priorities now and in 20 years.
In fact, many of the critical issues insurers will face over the next 20 years are also today. “The future is already here. It’s just not evenly distributed,” said Pieroni, quoting science fiction author William Gibson. To make the future a reality and become a leader, “the insurance industry needs to become much better able to handle change,” he said.
