Insurers who succeed will “do so by dramatically transforming their workforces and cultures to operate in a digital world,” according to a report released on Tuesday by Accenture, a global professional services company providing a broad range of services and solutions in strategy, consulting, digital, technology and operations.
The Accenture Technology Vision for Insurance 2016 report, titled People First: The Primacy of People in the Age of Digital Insurance, said that the next wave of technology – Internet of Things (IoT), platform-based ecosystems and artificial intelligence – is maturing and expected to ultimately transform the very nature of the insurance organization and what it does. In fact, 90% of the 450 insurance executives polled said they expect the pace of technology change to “increase rapidly or at an unprecedented rate over the next three years.” In addition, more than four-fifths (83%) of insurers see IoT bringing about significant change or complete transformation in the industry, Accenture said in a press release.
For the study, Accenture Research conducted a global survey of more than 3,100 business and IT executives across 11 countries and 12 industries to capture insights into the adoption of emerging technologies. The insurance industry report is based on the sample of 445 respondents from global insurance companies. Respondents were mostly C-level executives and directors, with some functional and line-of-business leads, at companies with annual revenues of at least US$500 million, with the majority of companies having annual revenues greater than US$6 billion.
The report found that the digital trends identified in Accenture’s Technology Vision 2016 report – intelligent automation, liquid workforce, platform economy, predictable disruption and digital trust – offer insurers an opportunity to shift from their traditional business model to one where they can automatically assess and price risk directly, individually and in real-time, as well as help customers avoid losses in the first place. However, taking full advantage of these trends will require insurers to dramatically transform their workforce and culture, Accenture said in the release.
“The emergence of digital technologies and the adoption of platform partnerships is causing a shift in the insurance workforce,” said John Cusano, senior managing director of Accenture’s global Insurance practice, in the release. “Digital insurers are hiring employees that are more tech savvy, creative and analytical, and they are now competing for top scientific, engineering, technology and mathematics talent. Insurers are also increasingly introducing ‘intelligent automation’ that can consume and analyze vast amounts of data and perform complex processes to complement this new workforce. Companies need to be forward-thinking about evolving their culture to embrace all of these changes.”
To take advantage of these technologies and harness these changes for maximum benefit, the report stated, insurance executives will need to transform their workforces and cultures by putting people first. To that end, the report identifies four key pillars needed for implementing a successful digital culture: built for change, data driven, embrace disruption, digitally risk-aware.
Digital insurers are developing news skills, processes, products and ways of working, shifting toward a workforce that is flexible and able to keep up with the rapid pace of change, which requires evolving skillsets, Accenture said. Nine out of 10 respondents (90%) believe that training their workforce has become more important today than it was three years ago; and more than three-quarters (78%) believe a more fluid or “liquid workforce” will improve innovation by introducing more diverse thinking and individuals to the process.
Emerging technologies are also making it possible for insurers to use data to form a stronger foundation for decision-making at every level of the insurance company, the release said. Leading insurers will enable machines to harvest and act on intelligence. Most insurers (86%) believe that using intelligent automation, driven by artificial intelligence, will give them a significant competitive advantage by enabling them to innovate and create new business processes. In total, 82% of insurers said that “automation driven by artificial intelligence will be seamlessly embedded into every aspect of the business in the next five years.”
With regard to embracing disruption, insurers will need to adopt technologies that will enable them to do things differently – and not like a traditional insurer, the report said. The vast majority (94%) of insurers believe that adopting a platform-based business model and engaging in ecosystems of digital partners is critical to their success, while 83% believe these business models will become part of their organization’s core growth strategy within three years.
The move toward digital has created many new risks for insurers, including new security threats, demand for transparent use of sensitive data and questions around ethical use of new technologies. More than three-quarters (78%) of insurers believe that they are exposed to more risk than they are equipped to handle as a digital business. ‘Digital trust’ will need to be considered and integrated into the development process for everything they do moving forward, Accenture said.
“It’s not about using more technology, but on enabling people – consumers, workers and ecosystem partners – to accomplish more with technology,” Cusano said. “It’s about changing the corporate culture to see technology as a means to help people adapt and learn, create new solutions, drive change and disrupt the status quo. Whatever their role, all of an insurer’s employees need to expect change, understand its impact and keep pace by evolving and adding to their skills. This will require insurers to develop workforce strategies that prepare all their workers to adapt to the new organizational culture, way of working and customer behavior of the digital era.”