Insurance 2040: Industry Trends & Priorities for the Future
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Insurance 2040: Industry Trends & Priorities for the Future

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As the industry looks ahead to the next 20 years, the need for insurers to embrace digitalization and technological change is impossible to ignore, argues the CEO of ACORD Solutions Group.

As the industry looks ahead to the next 20 years, the need for insurers to embrace digitalization and technological change is impossible to ignore. ACORD recently released results from an industry-wide survey on the future of insurance, highlighting the technologies, capabilities, practices, and strategies projected to have the greatest impact on the global industry in the near and long term.

The “Insurance 2040” survey, distributed earlier this year in collaboration with DXC Technology, sought the perspective of industry professionals on the outlook for the industry over the next two decades. Survey respondents represent organizations across five continents and various lines of business, with more than half in P&C, and the remainder a mix of Life and Multi-Line. Primary carriers comprise about one-third of participants, with brokers making up another third; the remaining third of stakeholders consist of reinsurers and vendors.

Sources of Competitive Advantage

Unsurprisingly, nearly 50% of survey participants anticipate that their greatest long-term source of competitive advantage will be the way in which they leverage technological capabilities.

Interestingly, they expressed that operational efficiency and excelling in core insurance functions (underwriting and claims) may not be the key to driving superior performance. Rather, technology-enabled optimization of these functions will become a baseline, necessary but not sufficient for differentiated advantage over the long term. While core insurance functions will remain of paramount importance, execution will rely more and more on thoughtfully leveraging the right technologies. Next-generation core capabilities will be of critical importance to delivering superior underwriting and claims outcomes.

Additionally, leading carriers will not be forced to make trade-offs between the historically discrete strategies of operational efficiency, customer experience, and product leadership. These leaders will be able to simultaneously provide attractive rates, deliver superior customer interactions, and develop differentiated solutions.

With this in mind, insurers will need to position themselves to employ a composite strategy, integrating digital capabilities that help them deliver across all of these areas. Numerous ACORD studies have already shown composite strategy execution to be a prerequisite for high performance in several key markets, including the North American P&C market.

Respondents similarly agreed on the types of capabilities they will need to prioritize. Omni-channel capabilities and cloud-enabled efficiencies are expected to become “solved problems” in the near future. However, more than 80% of participants believe that cybersecurity and risk management technologies will remain a top priority over the next 20 years. Current areas of concern, such as data and analytics, as well as the need to attract and retain top talent, are also expected to become even more of a priority – more than 75% named these as top long-term priorities.

Future Industry Landscape

Key trends that the industry is already facing are also likely to continue for the long term, according to respondents. For example, as technology yields increased amounts of accurate, timely data, practices such as usage-based underwriting and simplified issued life products are expected to become widespread. Telematics, wearables, and other devices will allow insurers to leverage exposure data to dynamically assess risk and premiums, adding value across stakeholders.

Moreover, about 50% of respondents anticipate bundled insurance products to have a material presence in the industry by two decades from now, while embedded insurance products are also thought likely to achieve a significant share of premiums and profits. Survey participants also recognize that nontraditional industry competitors are not going away. Though it may take some time, nearly 25% of the industry professionals surveyed believe these competitors will capture material share of premium and profit by 2040.

Talent & Technology

Increased sophistication of technologies such as artificial intelligence, machine/deep learning, and Internet of Things (IoT) are projected to have material impact on the workforce. Respondents indicated that, from the C-suite down, familiarity and proficiency with available technology tools will be an increasingly important capability. There is widespread agreement that insurers will increasingly rely on technology-enabled processes, perhaps mitigating the looming talent crisis facing our industry over the next 10-20 years. Over half (52%) of respondents also named technology as the most critical capability/competency for the C-suite by 2040.

While the need for human talent and expertise in our industry cannot be overstated, it is not surprising that we will see the focus shift toward familiarity and proficiency with emerging tech capabilities. It will critical to attract, develop, and retain professionals with this skill set to drive innovation and advancement.

Planning for 2040: Industry Priorities

In ranking top technology priorities over the next 20 years, three areas stood out for industry stakeholders.

Nearly 25% of respondents name APIs as a necessity for the near-to-medium term, recognizing standardized data exchange via APIs as a key enabler of transformation. However, they show confidence in addressing the need for API development over the next decade, naming it as less of a priority by the time we reach 2040.

Instead, respondents point to artificial intelligence and machine learning capabilities, as well as quantum computing, as priorities that will become increasingly important over the longer term. Quantum computing, in particular, showed a dramatic increase, with twice as many respondents prioritizing it at the 20-year mark vs. the 10-year mark. These tools offer significant value for the future of the industry through real-time data leverage and risk assessment capabilities. Respondents are well aware of the potential of these technologies to truly transform the industry.

The research indicates that technological capabilities, and the way in which insurers choose to leverage them, will be critical to how stakeholders interact, compete, and perform in the years to come. Insurers will need to assess their current and long-term priorities, and recognize how they should adapt now in order to succeed in the future.

A summary of the results of the “Insurance 2040” survey, as well as more information on related industry studies, is available at