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From Digital Wallflower to Digital Disrupter
Accenture Technology Vision 2014 for Insurance
Every Insurer Is a Digital Insurer
Six trends that will shape the future of insuranceThe 2014 edition of the Accenture Technology Vision highlights
six IT trends that will have a transformative effect on businesses
over the next three to five years. Collectively, these themes
represent the newest expression of Accenture’s stance that
“every business is a digital business”.
01 Digital–physical blur: Extending intelligence to the edge
02 From workforce to crowdsource: Rise of the borderless enterprise
03 Data supply chain: Putting information into circulation
04 Harnessing hyperscale: Hardware is back (and never really
went away)
05 The business of applications: Software as a core competency
in the digital world
06 Architecting resilience: Built to survive failure
2
Insurers must ride the next surge of digital disruption A new wave of disruptive digital technologies has broken and insurance carriers cannot ignore the opportunities and threats that this brings.
Those that win the race to transform into digital
insurers will find opportunities to disrupt their
existing markets as well as to drive new revenues
and profits in industries and customer segments
where they have not traditionally competed.
Those that don’t get out of the starting blocks
quickly enough will be outrun by more aggressive
insurers—and they may also lose market share
and profits to tech companies, automotive
manufacturers, and other companies pioneering
emerging technologies that undermine the
traditional insurance business model at its
foundations. The choice is a stark one: become a
disrupter or be disrupted.
Consider, for example, how much trust some
consumers have in organizations such as Google
and Facebook or the brand loyalty that some
automobile manufacturers command. Now look at
insurance, where customers have little loyalty—and
will switch providers simply to save a few dollars a
month with little to entice them to stay.
Accenture researchi finds 67 percent of insurance
customers would consider purchasing insurance
products from organizations other than insurers,
including 23 percent who would consider buying
from online service providers such as Google and
Amazon. Fifty-two percent would prefer to apply
for or purchase insurance online. That’s a sobering
thought for insurers in a world where the disrupters
are coming to market with innovations that don’t
simply modify or accelerate the industry but
redefine it.
In the case of insurance, radically different offerings
may even find ways around the capital and
regulatory requirements that burden traditional
insurers. The competitive threat is not that the
consumer may buy insurance cover from Google or
Ford—it is that he or she might buy a driverless car
with a cheap extended warranty and may no longer
require a conventional auto insurance plan at all.
ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE
3
Waves of innovation Companies from industries as different as telecoms
and automotive manufacturing are coming to
market with products and services that might
subvert traditional approaches to assessing risk,
distributing insurance products, and settling claims.
Verizon has launched Verizon Telematics to
offer safety and diagnostic telematics and fleet
management services—a move that positions it as
the potential owner of relationships with consumers
that need vehicle cover. Google, meanwhile, has
acquired smart-thermostat and smoke-detecting
hardware company Nest, readying itself for the
smart home of tomorrow.ii What might that mean
for home insurers?
Against this backdrop, forward-thinking insurers
are assessing the role they have to play in enabling
disruption and embracing innovation. Without
someone to assess, manage and mitigate new
risks, many innovations and disruptions will not
become commercially viable. Until there’s insurance
coverage for driverless vehicles that provides for a
shift of liability from consumer to manufacturer,
they will not be able to take to the roads.
Rather than fearing the upheaval the driverless car
will bring to their market, insurers should be looking
at how they can enable it. This is the type of creative
destruction of old business models that will allow
tomorrow’s insurance giants to lead their markets,
often becoming more profitable in the process.
The process of change might be painful—
regulatory compliance and cultural inertia are
major obstacles—yet insurers also have many
assets that will help them to achieve their digital
transformation. With their deep resources, strong
balance sheets, enormous scale, stockpiles of data
and process discipline, insurers are primed to take
a leading role in new ecosystems that connect
customers to a range of products and services.
Traditional insurance may be only one of the sticky,
everyday services in such an ecosystem, which will
draw together a range of companies and services.
Tomorrow’s connected insurer can reposition itself
to play a positive daily role in the customer’s life.
To the individual consumer it could be a life coach,
a personal trainer, an advanced driving teacher, a
risk manager and more; to commercial customers it
could be a business consultant providing business
insights, and other advice ranging from security to
securitization.
The digital wallflower steps upCarriers must be agile to build more effective
alliances and joint ventures with partners from
a range of industries, and create new value
propositions for their customers. They should learn
from other industries as they create innovative
customer experiences, products and services that
are relevant and personalized. And they should
aim to become part of the insured’s everyday life
as value aggregators, advisors, and facilitators of
a range of other services rather than simply being
there when a premium is paid or a claim is filed.
4
Insurance, as market research company Fjord puts
it, has traditionally been a digital wallflower—out
of the mainstream and slow to adopt the latest
advances. Though the insurance industry is in
the middle of the pack when it comes to digital
transformation, some leading insurers are already
disrupting their markets by leveraging digital
technologies.
An Accenture client, a large financial services group,
has adopted a digital-first approach to designing all
new customer-facing systems. When it builds new
consumer engagements, it starts off by considering
the attributes of the mobile device its customers
take with them wherever they go. Tapping into the
camera, GPS, and other features of the customer’s
tablet computer or smartphone, this group is able
to deliver highly automated, always-on customer
experiences. From the customer’s point of view, he
or she can find an agent, submit a claim, make a
bank deposit, get roadside help, and access a wealth
of value-added services from one screen, at any
time. That positions the group well for the next set
of disruptive digital technologies.
Despite regulatory obstacles and organizational
cultures that reinforce conservatism, insurers
that are not as well advanced with their digital
transformation strategies can start moving in
the right direction. They can start positioning
themselves in the foreground with their customers
so that they’re less likely to be disintermediated
or marginalized over the next five to 10 years as
emerging technologies mature.
Some will launch new teams with a culture of
innovation and make a core competency of rapid
prototyping of new apps, and services that can be
quickly connected to legacy systems. Others will
establish intrapreneurial groups or innovation labs
within their businesses to incubate breakthrough
innovations or foster data monetization. Certain
insurers might use their balance sheets to provide
venture capital to the start-ups that are nurturing
the technologies of the future that will need to be
insured in order to become a safe reality.
A few may even open themselves up to the
possibility of disaggregating the value chain
by providing their back-office capabilities and
processing backbones to other brands. They’ll accept
that they’re not leaders in developing technologies
or building consumer brands, instead partnering
with organizations that excel in those capabilities.
There is no single approach that will be right for
every insurer. However, standing still in such a
rapidly advancing environment will most certainly
be wrong.
Without someone to assess, manage and mitigate new risks, many innovations and disruptions will not become commercially viable.
ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE
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TREND 1
Digital–physical blur: Extending intelligence to the edge The real world is coming online as smart objects, devices
and machines increase our insight into and control over
the physical world. More than just an “Internet of Things,”
it’s a new layer of connected intelligence that augments
employees, automates processes, and incorporates
machines into our lives.
6
From wearable computing to home sensors and
vehicle telematics, our world is being reshaped
rapidly by intelligent interfaces that blur the
physical and the digital. The quantity of these
connected devices is increasing as dramatically as
their prices are dropping.
The technology in these interfaces is constantly
improving, giving them richer functionality. This
allows them to take advantage of the cloud to
share data with other “edge” devices—those whose
edges touch each other, enabling unprecedented
connectedness. It also allows them to sense
environmental variables, and feed analytics engines
and visualizations so that organizations can make
smarter decisions in real time.
Over the next five years, the proliferation of
intelligent edge devices is likely to bring massive
disruption to the insurance industry. Digital-
physical blur promises to transform the industry by
giving insurers usage and contextual data they can
use to refine risk, redefine products and transform
customer relationships.
Forward-thinking insurers are not only integrating
existing trends such as vehicle telematics into their
business models, but they’re considering what the
next wave of disruption—perhaps most dramatically
illustrated by the autonomous car—will mean for
their businesses. And carriers that started off with
pay-per-use insurance offerings are moving toward
mobile, contextual and behavior-based products.
Start-ups such as Insurethebox and Drive like a
Girl have entered the market to focus exclusively
on highly targeted markets with telematics-based
products and services. Traditional insurers around
the world—from Hyundai Marine & Fire Insurance
Company in Korea to Aviva in the UK—are also
already integrating vehicle telematics into their
businesses.iii
Progressive in the United States, for example, uses
telematics data to assess individual driver risk and
rewards safer drivers with low premiums.iv With more
than 10 billion miles of vehicular and behavioral data
to draw on, Progressive can use metrics such as when
and how far you drive, and how frequently per mile
you hit the brakes, to personalize your premium.
In India, Policybazaar.com has carved out a new
business for itself by using Chleon’s insurance-
telematics-as-a-service to calculate future motor
insurance premiums for car drivers.v With the
driver’s permission, his or her personal driving score
can be provided to insurance companies that have
accepted this score as a rating factor. Leading global
commercial lines carriers, too, are refining their risk
engineering through sophisticated fleet telematics
programs.
This is just the beginning for P&C insurers, which
must contemplate what the implications will be for
their businesses when a significant proportion of
the private cars and corporate fleets on the roads
are replaced by safer autonomous automobiles that
marginalize human driver error in the underwriting
equation.
Driverless cars—upheaval for insurance Google and Nissan claim their driverless cars are
just five to six years away. Public policymakers are
already preparing for the driverless car—the US
states of California, Nevada, Michigan, and Florida
have already passed legislation to allow driverless
cars on their roads.
ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE
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Driverless cars will introduce massive upheaval
to the auto insurance industry. CarInsurance.com
postulates that if just 10 percent of all vehicles in
the US were self-driving, the number of accidents
each year would be cut by 211,000. This would save
1,100 lives and cut the economic cost of accidents
by $22.7 billion.vi
What’s more, liability will shift from drivers to auto
manufacturers and technology firms, while the
risks that need to be managed will be increasingly
centered on technology failures and cyber-security
breaches rather than on human error. Implementation
of autonomous technologies in just 20 percent of
cars on the road could be enough to cause a seismic
shift in the auto insurance market by significantly
reducing the number and potential severity of claims,
in turn lowering risks and premiums.vii Market
researcher Celent believes total auto physical-
damage premiums could drop by 30 percent from
2013 to 2017 and by 80 percent from 2018 to 2022
as a result of the rise of the driverless car.viii
Consider the possibility of Internet firms or auto
manufacturers using the data they gather from
these cars to offer insurance and risk management
services to their customers at premiums lower than
today’s insurers are able to offer, or completely on
a pay-per-use basis. Car manufacturers could sell
insurance as part of an extended warranty, while an
organization like Google could position itself as the
owner of the insured customer relationship.
This reality means insurers will need to refresh their
well established distribution, rating, claims and non-
underwritten services to prepare for a new world.
Analytics and data management infrastructure will
be a must to intelligently handle the massive flow of
data into their organizations.
Their claims organizations will need to become
smaller and more specialized. Product managers
will need to rethink the way they design products.
And distribution may shift from the insurer’s
direct and agent channels to partners such as auto
manufacturers and mobile operators.
Beyond the driverless car and the autonomous
vehicles already in wide use in heavy industries
such as mining, the unmanned ship might be one
of the next major changes in the global transport
industry. Rolls-Royce Holdings has created a virtual-
reality drone prototype in Norway with the goal of
eventually allowing captains on land to command
fleets of crewless ships. Rolls-Royce argues that
drone ships would be safer, cheaper and more
environmentally friendly than today’s vessels.ix
Under international conventions that set minimum
crew sizes, ships that don’t comply are considered
unseaworthy and hence uninsurable. But that
could change, bringing massive disruption to the
commercial insurers that provide maritime cover.
After all, the European Union is already funding
a €3.5 million ($4.8 million) study of unmanned
vessels.
What might it mean for commercial insurers if
crews could no longer be held hostage by pirates,
if cameras and sensors helped reduce accidents
at sea, if there was no need to provide workplace
insurance for crew members? As in the instance of
the driverless car, the unmanned ship could change
the face of risk and cover in a massive industry.
Once again, the need for insurance may shift from
the operator to the manufacturers and IT firms that
provide the vessel and its electronic systems.
Celent believes auto insurance premiums could drop by 30% from 2013 to 2017 and by 80% from 2018 to 2022 as a result of the rise of the driverless car.
8
Home is where the sensors areThe digital-physical blur is also creeping into the
home, and many insurers are starting to take note.
One tantalizing example of what the future may
hold: a smart refrigerator might provide health
insurance discounts for storing ‘health’ food.
Perhaps insurers could include food retailers into
the ecosystem to replenish customers’ refrigerators
when food runs low, and notify them when produce
reaches it expiry date.
Smart carpets that detect falls are being developed
with the infirm and elderly in mind. That could be
a boon for health insurers, which could save costs
and shave precious seconds in medical response
times by getting an alert when the homeowner
collapses on the floor. These carpets can be set to
alert the police if anyone walks on them when the
homeowners are away.
Another sign of the times: USAA recently patented
a home data recorder that can track temperature,
wind speed and mechanical vibrations as they affect
the house, and humidity which could cause mold
in the walls.x As this type of data becomes more
available and prevalent, home insurance pricing
becomes much more interesting.
The smart edge of industryIndustrial companies, meanwhile, have led the
adoption of smart edge devices over the past five
years, improving efficiencies with technologies
ranging from radio-frequency identification (RFID)
tags in supply chains to robotics and remote
monitoring and control in oilfield and pipeline
operations. This trend brings with it a host of
opportunities for commercial insurers—but also
some threats in a market segment where risk
assessment and pricing have traditionally been
complex and opaque.
Building owners, property managers, and industrial
equipment vendors are all are adopting integrated
solutions such as continuous commissioning systems
that make use of sensors throughout a building’s
workspaces and mechanical equipment to collect data
with millisecond resolution on building performance.
Data from sensors in factories and other industrial
plants could predict and then alert the insured to
the risk of the imminent failure of an expensive piece
of equipment. Carriers could package insurance
policies with maintenance plans from equipment
suppliers, offer customers lower premiums if they
manage their equipment proactively, and monitor
adherence to agreed parameters.
According to Munich Re, the 2012 drought in the
US was, for reinsurers, one of the costliest crop
insurance events on record.xi In future, insurers
might start to look towards systems that enable
irrigators to monitor water-use quotas, set
alarms to indicate high/low usage rates, and track
meteorological and crop data so that they can stay
ahead of the market impact of such events and
begin to predict rather than just react to it.
For example, Climate Corporationxii helps to protect
and improve farming operations with data analytics
software, insurance products and risk management
services. It provides hyper-local weather monitoring,
agronomic data modeling, and high-resolution
weather simulations to farmers, supplementing the
U.S. Federal crop insurance program. It also offers
the climate.com web and mobile service to provide
real-time data for field-level monitoring, yield
forecasting, crop insights and decision support.
ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE
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Consumer wearables to shape behaviorBeyond the commercial and personal P&C sectors,
the digital-physical blur has some profound
implications for health insurers. Thanks to
falling prices and miniaturization of microchips,
consumer wearables such as Nike’s FuelBand,
Adidas’s miCoach, and Fitbit are rapidly becoming
commonplace.
These devices track exercise and physical activity
in ways that allow users to easily gain insight into
their performance—often in real time. This gives
them information they can use to make decisions
about picking up the pace, going for another lap,
or pushing for a personal best. Herein lies the
opportunity to reward insurance customers for
healthy behavior.
Blue Shield of California, for example, uses FitLinxx’s
Pebble device in its activity program. The company
offers incentives linked to the user’s health
insurance benefits, along with social games to drive
participation. And the EveryMove rewards program,
in partnership with insurance companies like the
LifeWise Health Plan of Washington, tracks behavior
through wearable computing and rewards users
with points that can be used for branded goods,
services, or even discounts on insurance rates.xiii
Already, life insurers are harnessing this information
to assess an applicant’s physical activity level and
general health when pricing premiums.
Privacy implicationsTo take advantage of these new technologies,
carriers must respect their privacy implications. The
key is to notify individuals about how their activities
are being assessed, give them the choice of opting
in, and explicitly share with them the choices of
actionable information at the decision.
These aspects are crucial. Privacy issues are likely
to keep making headlines as privacy watchdogs
jump in to defend against unauthorized tracking
of consumers. An insurer that builds a reputation
for using data-driven insights to provide valuable
services while using consumers’ personal data in
trustworthy ways will have big advantages over
competitors.
Its brand will be more valuable, it will have more
opportunities to attract and retain lifetime
customers, and it can become a preferred partner
in a larger value chain of goods and services.
Leading insurers must start considering how they
can position themselves at the heart of customer
experiences and information flow enabled by the
digital-physical blur—or risk a slow loss of their
most potentially valuable interfaces with the
customer to non-traditional competitors.
10
This time next yearIn 365 days, you should step up your business
agility by pushing decisions to the edge:
• Consider teaming with a firm outside the
insurance industry to pilot a new offering.
• Develop a big-data/analytics infrastructure to
support the data velocity and insight needs of
digital–physical projects.
• Address potential data privacy issues as new
pilots and projects are developed.
• Start planning for known technology disruptions
coming down the pipeline. Example: plan for
driverless cars in 2020.
Your 100-day planIn 100 days, promote decisions at the edge by
completing the following:
• Define how consumers engage with your
products and services and the locations where
they engage.
• Look to innovators outside of financial services
to identify opportunities to enhance consumer
experiences and enable field workers.
• Consider building labs or intrapreneurial groups
to experiment with business models and
technologies underpinned by the digital-physical
blur.
• Re-evaluate your corporate privacy policy to
address the new cyber-physical interactions for
your business.
• Start consulting with regulators and policymakers
about the regulatory implications of cyber-
physical interactions.
ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE
11
TREND 2
From workforce to crowdsource: The rise of the borderless enterprisePicture a workforce that extends beyond your employees,
one that consists of any user connected to the Internet.
Cloud, social and collaboration tools and technologies now
allow insurers to tap into vast pools of human resources
across the world, many of whom are motivated to help.
12
When US insurer Allstate wanted to solve the
perplexing problem of creating a better model for
predicting bodily injury liability based solely on the
characteristics of the insured vehicle, it turned to
the Kaggle crowdsourcing platform to supplement
the skills on its own payroll.xiv This powerful network
of experts has solved tough data challenges from
airline flight optimization to retail-store location
optimization for some of the world’s largest
organizations, including GE and Facebook.
By offering a $10,000 cash prize as an incentive,
Allstate inspired 100-plus teams made up of more
than 200 members of Kaggle’s global network of
computer scientists, mathematicians and data
scientists to come up with a better algorithm. The
winning entry was 271 percent more accurate than
Allstate’s existing method for predicting claims
based on vehicle characteristics.
This is just one example of how digital collaboration
technologies are no longer just about enabling
insurers to collaborate more effectively within the
boundaries of their own enterprises—they are also
connecting them to smart, enthusiastic people in
the outside world who have the interest, motivation,
time and expertise to work with insurers to solve
some of their most daunting business challenges.
An insurer’s workforce today needn’t be restricted
to the people on its payroll or bound by its culture,
but can include nearly anyone in the world with an
Internet connection. Thanks to digital platforms such
as Kaggle, InnoCentive, Elance and oDesk, there is a
vast world of online labor to tap for tasks ranging
from designing a new logo to helping create the
breakthrough products and services of tomorrow.
Not as new and radical as it seemsFar from a radical idea, crowdsourcing is a proven
concept that has already impacted the businesses
of many insurers. What is the open-source software
movement besides the original expanded workforce,
made up of pioneering thinkers who come together
to solve business and technical problems in a
freeform, collaborative manner? The success of
open-source software proves conclusively that
there’s no shortage of people willing to work with
other individuals and organizations to solve problems.
They are surprisingly ready to work for little
or no money if they get other rewards: prizes,
recognition, fame, the sense of pride in creating
something useful. Indeed, from the Kickstarter
crowdfunding platform to Kaggle, there are millions
of people worldwide ready to get involved in online
experiments, contests, challenges, and more.
But few executives in insurance have, to date,
fully grasped the idea of accessing a truly liquid
workforce—pools of premier talent gathered in
virtual communities and coalescing around specific
business problems. This expanded workforce likely
offers expertise that is not immediately available
in-house. It also offers scale—it can be leveraged to
solve problems that may be too large, too expensive
or too counter-cultural to solve creatively internally.
The crucial point is that this expanded workforce
is not to be confused with employing contractors
or temporary labor, or moving to an outsourcing
arrangement. The channels, structures and
transactions are entirely different—far more fluid
and versatile than any familiar labor model.
ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE
13
The world is the focus groupThe paid workforce isn‘t going away because not
every problem is best solved by crowdsourced
solutions. But the use of crowdsourcing promises
to firms’ employees a new source of information
and ideas that they can use to improve customer
service, create stickiness and drive innovation.
Insurers could also use crowdsourcing tools and
approaches to harness ideas and innovation across
departmental boundaries.
Considering that there are thousands of people
willing to provide rich insight into insurance
products and the consumers that buy them, insurers
will be better able than ever to predict how the
market will react to their products and who will buy
them. They can segment markets more discretely
and test value-added features to see who will pay
for them. Suddenly, the focus group is made up
of potentially tens or hundreds of thousands of
real-world consumers rather than 125 selected
attendees.
It’s still early days for the use of an expanded
workforce, and being a borderless enterprise brings
its own challenges. For instance, the inherent
transience and anonymity of the expanded
workforce significantly limits traditional human-
resources activities such as job training. And it
raises many thorny questions about the security of
intellectual property.
Unleashing innovation Innovation has emerged as a C-suite issue for all
insurers. Yet many are impeded, as they try to
fast-track innovation, by an organizational culture
focused on predicting risk and complying with
regulations. They lack the sort of creative thinking it
takes to disrupt established industries and markets.
That’s where the crowd could have a powerful
role to play in shaping the insurance business of
tomorrow.
Because innovation is happening organically
everywhere, insurers should be looking beyond
the borders of their own enterprises for the
innovations that could transform their businesses.
This open approach allows them to tap into ideas
their conventional workforces may not be able to
conceive of, and solve old problems in new ways.
Take the case of UnitedHealth Group in the US,
which uses the InnoCentive crowdsourcing network
as one source of innovative, customer-centric
thinking.xv It asked the InnoCentive community
to come up with innovative new concepts for its
members’ online experiences to supplement the
thinking of its own innovation group.
In insurance, the foundations for effective
crowdsourcing strategies are in place. Most insurers
have some presence in social media, where they
interact with customers transparently and in real
time. Accenture research indicates that 55 percent
of customers would be interested in insurance
products and services offered on social media.xvi
One potential leap forward is to invite participants
in their social media channels to help improve their
products in more collaborative ways. This is a way
of learning from people who use their channels
and products, while creating a human connection
between consumers and the insurer.
14
Yet some best practices have already emerged
for the successful use of crowdsourcing to solve
business problems. Planning must be diligent, the
brief must be explicit, and complex tasks must be
clearly and logically broken down into sub-tasks
that can be parceled out to the crowd in a way
that allows them to be reintegrated into the overall
product or project.
Despite these challenges, the opportunity is
immense for insurers that are willing to step up.
Those that get it right will find themselves with
better insight into their customers and an increased
agility to retool themselves with the skills necessary
to respond to the changing technology landscape.
Your 100-day planIn 100 days, begin to create a strategy for
harnessing the crowd.
• Since insurance lags crowdsourcing trends, look
at industries such as technology and consumer
brands for inspiration.
• Evaluate the potential benefits of using expanded,
collaborative workforce platforms and toolsets to
support your analytics, market research, product-
development, and innovation functions.
• Develop an initial strategy to engage existing
online communities in support of core functions
such as market research and product development.
This time next yearIn 365 days, be familiar with the various types of
crowdsourcing platforms that apply to your business.
• Identify which tasks are most easily broken into
smaller independent tasks ahead of launching a
pilot project.
• Establish a pilot to evaluate the value of tapping
into a different workforce and set of skills to the
ones you have in your current organization.
• Understand the types of specialized skills that
cause surges in demand for your organization.
Determine whether adoption of expanded
workforces can resolve these surges and re-
evaluate your hiring structure in response.
ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE
15
TREND 3
Data supply chain: Putting information into circulationTo truly unlock the value of their data, insurers must start
treating data more as a supply chain, enabling the data to
be accessed and then to flow easily and usefully through
the entire organization—and eventually throughout the
organization’s ecosystem of partners too.
16
Insurance leaders today view data as among
their most valuable assets—some even call it the
lifeblood of their organization. That’s why they’re
implementing the newest big-data tools, investing
in advanced analytics applications, and purchasing
the latest data visualization software.
Yet the reality is that these easily become one-
off data fixes that contribute to data silos rather
than provide an end-to-end data solution. Few
insurance companies have mastered the concepts
at the foundation of modern data management—
ideas such as the mobility and portability of data,
its structure and velocity, and data as a “saleable”
product or monetization. Fewer still are comfortable
with these concepts at scale.
High performing insurers, however, will embark on a
journey to ROI; they will liberate their data, generate
value from it, and operationalize insights to drive
strategic decisions through the organization. Key to
their success will be managing their data like any
core product—in the context of a supply chain.
The supply chain begins when data is created,
harvested, imported, or combined with other data.
The data then moves, flows, and transforms through
the supply chain, incrementally acquiring value.
The supply chain ends with a valuable insight as its
output. Guiding this movement is a federated data
services platform, which unifies data from multiple
systems into a single view and enables business
users to interact with the data in a standardized way.
Enabling data movementOne example of an insurer that has done just that
is Metlife, which has invested in a new database
system and application called The Wall.xvii The
system brings together data from a number of
disparate legacy sources and merges it into a single
record for customer-service representatives. The
interface looks and functions just like Facebook,
meaning that new hires don’t need to be trained on
complex enterprise software. In future, customers
could be allowed access to the same application to
answer their own questions.
Data access on its own isn’t enough—velocity is
needed too. Quick access to valuable data means
that analytics can be performed, insights can be
gained, and actions can be taken in the sometimes
very small window of opportunity available to
businesses.
Historically, IT professionals have given precedence
to “hot” (high priority) data—data that is accessed
frequently and saved onto high-performance
systems that can store and retrieve it very quickly.
For “cold” data—tax records, say—they have used
slower disk hardware or even tape backups in legacy
systems.
Newer prioritization practices improve data
acceleration by adding many more gradations
of “data temperature”—or data tiers. Tiered data
solutions allow for time-critical and commonly
accessed data to be stored in data-centric caching
structures, optimized for quick transport through
the supply chain.
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The next step is to enable dynamic movement of
data through these tiers, meaning they can be
“heated up” or “cooled down” at any time. Data
velocity is improved by the ability to seamlessly
change priority over time, based on business
need—but it’s also an efficient and cost-effective
capability. This makes sense when businesses
consider the wide range of how, when, and how fast
users need to consume data.
More uses for more data sourcesThe supply chain process starts with ingesting or
harvesting data. These days, companies can tap
into a wide variety of new data sources—including,
notably, data that they do not control or own.
Whether this external data is to be obtained from
partners, data-as-a-service providers, or open
data sources, companies should capitalize on the
business value that these new sources provide. To
do so, they must build embedded analytics teams
with knowledge of the business problems the
enterprise is trying to solve.
Insurers have a head start here, since they were
working with data from third parties before it
came in vogue. They have long leveraged data from
data aggregators such as credit bureaus to inform
decisions about customer risk rating, for example.
Now, the next step is to look at augmenting these
sources with social media sentiment, weather data,
and more.
This data can be used to inform better decision-
making within the insurer’s enterprise, and it can
also be used to add value to the customer’s life. For
example, an auto insurer could leverage traffic data
in its mobile app or data from another vehicle in
close proximity to warn insured drivers of accident
hotspots or traffic congestion. A home insurer,
meanwhile, could use data from a connected home’s
sensors to notify the owner of a potential fire.
The process of discovering new insights to answer
business questions is changing fundamentally as
users get faster access to more data. Now, when
data is manipulated as it moves through the supply
chain, value can be added to and obtained from
it in ways that were previously impossible. This is
because data discovery techniques allow businesses
to discover answers to questions that they might
never have known to ask in the first place.
Previously, traditional business intelligence methods
were the only way to answer prescribed business
questions; they require multiple lengthy steps
before a solution is possible. Now, however, data
discovery helps users to rapidly discern the very
questions that companies should be asking by
uncovering insights in a visually interactive and
rapidly iterative manner.
So that businesses can better “communicate” with
and analyze data, analytics is being embedded in
data discovery and visualization tools (as it is in
applications)—effectively enabling data scientists
and less-technical business users alike to do
analytics and data discovery more easily and
intuitively.
Data discovery techniques allow businesses to discover answers to questions they might never have known to ask in the first place.
18
The next step: cognitive computingAs the volume and variety of data grow, so too
do the scale and complexity of the data supply
chain, making it increasingly difficult to add to and
get value from data as it is manipulated. What if
machines could be taught to leverage data, learn
from it and with a little guidance, figure out what to
do with it?
That’s the power of machine learning—which is
a major building block of the ultimate long-term
solution: cognitive computing. Cognitive computing
incorporates components of artificial intelligence
to convey insights in seamless, natural ways to help
humans or machines accomplish what they could
not on their own.
Although complex, large-scale cognitive computing
may be beyond the reach of most insurers, there
are some cognitive computing capabilities that can
be put to work in practical and affordable ways.
Companies should focus on tackling well-defined
problems on a smaller scale—where machine
learning techniques can be leveraged to accomplish
practical cognitive computing goals.
For example, insurers could use natural language
processing to transform unstructured data, such
as social media posts or claims submitted in free
text, into insights. Streaming data—ranging from
news to weather information—could help insurers
to better respond to catastrophes or improve risk
management on behalf of their customers.
Monetizing dataBy the final stages of the supply chain, companies
have new opportunities to capitalize on its value.
From forging new partnerships to creating new
revenue streams, or even entering new markets,
insurers now have more potential than ever to
realize the true value latent in their data.
Now, companies can take advantage of the
opportunities for data monetization—to sell data
insights directly, share them through partnerships,
or develop entire ecosystems around them. Insurers
have the opportunity to think outside of the box
for new ways to appreciate and take advantage of
the true value in their data—provided they do so in
a way that is sensitive to the thorny issue of data
privacy.
Life and P&C insurers have data of such value and
richness that they have many potential avenues for
monetization. Who knows more about the assets
that a customer owns, and is in a better position
to create a range of cross-sales and lifestyle
opportunities around this information than their
insurer?
Insurers could extend data they collect from
telematics devices or wearables into their ecosystem
of partners to offer even richer data about
customers’ behavior and context. In addition to
ecosystem partners and aggregators, insurers could
even sell data to their own customers or offer it to
them as a value-add—for example, usage patterns
of commercial vehicle fleets.
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Your 100-day planIn 100 days, begin to develop a comprehensive
strategy around laying the foundation for your
data supply chain.
• Ensure you have a data governance framework
in place to address data quality, metadata
management and master data management.
• Build an inventory of your data, beginning with
your most frequently accessed and time-relevant
data.
• Focus on dark (under-utilized) and unstructured
data rather than falling prey to big-data hype.
• Start looking for external data sources that
complement existing data.
There are no shortcuts in the data supply chain.
But it is also one of the most rewarding journeys
that companies can make in their transformation
to become truly data-driven. Progress becomes
possible when the transformation process is viewed
as a matter of small steps rather than one giant
leap. Expect leading insurers to start by establishing
a data services platform, followed by implementing
a single data supply chain for a specific outcome.
Once that’s done, they will incorporate another—
and another.
Even those insurers that have only just begun to
think about their data in the context of a supply
chain can begin with tactical implementations
that deliver value rapidly off limited investments.
They can start off with small projects with clear
key performance indicators rather than building
or re-architecting massive data warehouses or
marts, using agile tools such as self-service business
intelligence to get data rapidly into end-users’
hands. They can also start with data audits to
understand exactly what data treasures they may
have hidden deep within millions of customer
records or file handler notes and narratives.
The return on investment may not be immediate.
However, this process can prepare an insurer to
become a digital disrupter by putting data together
quickly, logically and at scale to mine it for relevant
insights into risk, claims, and customers. Having this
type of data supply chain mentality and capability
will give the insurer an edge over its competitors.
20
This time next yearIn 365 days, begin the journey to ROI by building a
supply chain that is designed to drive outcomes.
• Begin to simplify and federate access to trusted
data.
• Target a proof of concept (PoC) to execute on a
targeted business-function problem and iterate.
Repeat many such PoCs over the next year,
putting the most successful into production and
moving all the while towards industrialization.
• Investigate opportunities to monetize your data.
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TREND 4
Harnessing hyperscale: Hardware is back (and never really went away) Eclipsed by more than a decade of innovation in software,
the hardware world is now a hotbed of new development as
demand soars for bigger, faster, more efficient data centers.
Every company will see the benefits of “hyperscale”
innovation trickle into its data center in the form of cost
reduction.
22
Wearable computers, onboard computers in
automobiles, sensors in homes and in factories,
and other edge devices are multiplying at an
unprecedented rate in consumer and enterprise
markets alike. IDC predicts there will be about
212 billion devices in the Internet of Things and
some 30 billion connected autonomous things
installed by 2020.xviii Data generated by such
devices—added to data from social media, third
parties such as credit information providers, and
insurers’ own digital channels and contact centers—
is quickly becoming a deluge that threatens to
submerge insurers’ legacy IT systems.
As all of this information begins to be collected
every day, every hour, and, in extreme cases,
multiple times per second, the systems insurers will
require to store and analyze this data at speed will
need to be sized at a scale that was unimaginable
just a few years ago. Welcome to the world of
hyperscale computing—super-sized, super-scalable,
and highly resilient systems designed to crunch
through vast volumes, variety, and velocity of data
at rapid speeds and with great efficiency.
As insurers embrace the digitization of their
business processes and the imperative to leverage
customer data for competitive advantage, they will
need to look at the latest innovations in the world
of hardware to enable the digital transformation of
their businesses.
It is to the giants of the Internet—among them,
Google, Microsoft, Facebook, and Amazon—that
they must look for inspiration for their next
generation of computing infrastructure. Each of
these runs infrastructures made up of hundreds of
thousands of servers.xix
These data-dependent companies have pioneered
the adoption of innovative technologies such as
low-power processors, solid-state data storage,
and in-memory computing to build data centers
that consume storage, bandwidth, memory, and
computing cycles on a massive scale at significantly
reduced operational costs.
The next generation of IT hardware As insurers strive to deliver connected services
to always-on customers and partners and master
the challenges of big data, they will benefit vastly
from the renaissance in hardware innovation. To
get started, technology leaders at insurers need to
ask themselves, “What could our business do with
unlimited computing power that can be turned
on and off as needed?” Then, they must think
about how their organizations can tap into flexible
computing power to meet the needs of the business
at the lowest possible cost.
With many insurers in the process of conducting
cloud computing proof-of-concept projects, the
new wave of hardware innovation is raising some
interesting questions for their CIOs. Over the next
five years, every large IT department will face the
choice between leveraging external clouds and
building big-data-oriented computing infrastructure
on-premise.
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To what extent can the data center scale up as
companies start collecting billions of miles in
telematics data? Could the insurer use hyperscale
computing to leverage data from connected
devices, social media, and other big data sources so
it can constantly reassess the risks of commercial or
private properties it covers? The choice of hardware
appliances or alternatives depends very much on
what the specific application needs are, and what
the usage patterns will look like. As such, solutions
must be tailored for individual cases.
In most cases, insurers will have heterogeneous
requirements that will be best served using the
correct recipe of commodity versus specialized
hardware and private versus public cloud
architecture. This means that, out of necessity and
for the foreseeable future, enterprise infrastructures
will be hybrid solutions—weaving hyperscale cloud,
on-premise, specialized hardware, and an enterprise’s
existing systems into a computing fabric that serves
more parts of the business in more demanding,
reliable, and scalable ways than ever before.
CIOs are at point where decisions on public
or private cloud, as well as commodity versus
specialized hardware, could become significant
differentiators. For some, hyperscale hardware
appliances will be the key to high performing IT
infrastructures that are able to evolve quickly
enough to keep up with the pace of digital
transformation. Yet on-premise choices are capital
intensive and increasingly specialized.
Clouds are complexWith the exception of the largest global financial
services groups and the biggest national insurers,
many insurers are likely to opt for a cloud-based
model to give them the performance they need. But
choosing the cloud does not remove the complexity
from the decision-making process.
How CIOs make this choice will depend significantly
on the systems they require. A life insurer may need
highly resilient services that fluctuate little during
the workday, but it may demand more of those
services at the end of every month or at the lapse of
policy terms. A P&C insurer with pay-per-mile auto
coverage may require real-time decisions based
on vast quantities of data. To choose wisely, CIOs
will need to understand how the service providers’
underlying hardware will impact its performance.
How will a cloud provider’s use of low-power CPUs
in its data centers affect operational costs over the
contract term? Can the organization’s applications
run on low-power CPUs, or would specialized
graphics processing units be more efficient for
computation? Does the code for its critical business
insights need to be rewritten to take advantage of
these new technologies?
24
This time next yearIn 365 days, be prepared to have your IT road map
include hyperscale technologies.
• Update models of your digital business’s most
demanding computing processes to understand
the advantages, trade-offs, opportunities, and
risks of hyperscale hardware choices.
• Create a hyperscale task force.
• Build the reference architectures for hyperscale
workloads and evaluate the applications that are
deployed to hyperscale.
Your 100-day planIn 100 days, make sure your organization
is informed about the available hyperscale
technology options.
• Ensure that your IT organization is aware of the
latest hardware innovations.
• Identify your data storage needs and the
magnitude of devices producing data in your
network (including sensors, smart meters,
devices, and data centers). Forecast their
expected usage based on one-year and three-
year business growth strategies.
• Create a plan that allows key data assets to be
portable across architectures.
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TREND 5
The business of applications: Software as a core competency in the digital world Mimicking the shift in the consumer world, enterprises are rapidly
moving from applications to apps. As organizations push for
greater operational agility, there is a sharp shift toward simpler,
more modular and analytics-enabled apps.
26
The way insurers build and deploy software has
changed dramatically over the past decade.
Where they once relied on big, monolithic
software systems to run their businesses, they
have increasingly turned towards componentized
CRM, agency, claims, policy administration and
rating applications that are extremely agile, highly
configurable and able to run on commodity
hardware.
Where upgrading a claims or policy platform was
once a multi-million dollar project that could
take two years or more, today such a project can
be broken into smaller chunks so that value can
be delivered at milestones measured in weeks or
months rather than years. Now, the next wave of
software innovation has arrived, promising even
more flexibility and simplicity.
Mimicking the appetite for mobile apps in the
consumer market, enterprises are starting to deploy
lighter, simpler, more modular and analytics-enabled
apps to end-users within their organizations as well
as to their customers and business partners. This is
a trend that promises to have a profound impact
on insurers as they reinvent themselves as digital
disrupters.
Those that have the ability to rapidly develop, or
partner to create and launch new applications in
today’s turbulent markets, will be best positioned
to innovate, collaborate, improve customer
experiences, and enrich personal interactions.
Indeed, some leading insurers are already using
mobile apps to interact and transact with customers
at scale, in a personalized manner and in ways that
add value to the customer’s life.
Enterprise mobility is one opportunity for insurers
to improve productivity and reduce costs, especially
when it comes to field surveys, and claims
processing and settlement. Insurance companies
have also been able to mobilize the claims process
with consumer-facing apps that link to their
enterprise systems. Allstate’s recently launched
QuickFoto Claim app allows a customer to take
pictures of a vehicle with minor accident damage
and get the claim processed without needing to see
an adjuster or go to a dealership.xx
And Taikang Life in China is leveraging a mobile
multi-media text and voice messaging app for
claims in a manner that improves efficiencies
and customer service.xxi Its customers simply use
WeChat—China’s largest mobile social messaging
platform—to report an accident. Customers take
photos, input information and send it through to
the insurer for remote assessment. A small, standard
claim might be settled in as little as 15 minutes.
Insurance as a positive part of everyday life P&C insurers, challenged by high churn rates, are
now considering how apps can help them retain
customers. Lifestyle apps that encourage risk-
friendly consumer behavior—for example, regular
exercise as monitored by fitness trackers, or careful
driving as reflected by telematics data—could
help improve customer retention and reduce
the frequency and size of claims. Users could be
rewarded with lower premiums, discounts and
coupons with ecosystem partners, or loyalty points
for participating.
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Because the smartphone or tablet computer is
location-aware and nearly always with the user, it
creates many interesting ways for insurers to weave
their brands and services into customers’ everyday
lives. In the world of commercial insurance,
American International Group (AIG) has created a
mobile app for business customers that subscribe to
its data-breach liability cover product, CyberEdge.xxii
The app gives users information on cyber-risks and
how to help mitigate and respond to them.
With mobile apps, the insurer is there with the
customer when he or she needs risk management
advice or even impromptu risk cover. As a result, we
see the insurance industry shift from the paradigm
of a policy covering an insured object—a car or a
life—towards risk cover bought for an insured unit
such as a mile or a day. Insurers and new market
entrants have a significant opportunity to disrupt
the market by creating new insurance management
systems that work by the unit of coverage and that
are tightly linked to context-aware digital sales and
delivery channels that price and monitor the user’s
coverage.
Just look at how Tokio Marine & Nichido Fire
Insurance in Japan is using mobile apps to sell
prepaid insurance by the day to people who don’t
own a car and drive only occasionally. When a user
is borrowing or renting a vehicle, he or she can
simply buy Choinori Insurance on the spot (literally,
insurance for “driving just a bit”) via a mobile phone.xxiii Young drivers who buy this product as they need
it can accumulate no-claims discounts that will be
applied to their first full auto insurance policy. And
in India, insurers have been selling life and pension
cover by SMS for several years. Customers can top
up their cover when they have a few rupees to spare
by sending a text message from any GSM handset.
Consumer apps for enterprise useApps are not just about delivering services to
customers—they also have a role to play in offering
employees and agents access to enterprise systems
and data in the sort of intuitive interfaces offered
by the mobile devices and social platforms they use
every day. That means IT groups at insurers should
be building software platforms and architectures
that essentially separate the big back-end services
from the applications that users interact with.
A big and positive consequence of the shift toward
an enterprise app world is that business functions
are partnering with technology organizations
to assume joint ownership of the new agile
applications. The back-end services—from data
centers to networks—still fall squarely under IT,
but in more and more organizations, the lines are
blurring as the business takes a more active role in
many aspects of front-end applications.
Increasingly, insurance apps will draw on data and services from multiple sources to provide customers with a single-screen solution for risk advice, risk cover and complementary services.
28
This trend is clear in the movement toward
enterprise app stores. Gartner predicts that by 2017,
a quarter of all business enterprises will have an
app store for managing corporate-sanctioned apps
on PCs and mobile devices. The top performers
are already leading the way: Accenture’s High
Performance IT research confirms that 54 percent
of high-performance IT groups have deployed a
mobile-enterprise app store, compared with just
22 percent of other IT organizations.xxiv
The flexibility and power of these apps is revealed
when they’re combined and connected in ways
that create a customized system capable of
handling larger business tasks. Software vendors
and enterprises alike are already changing how
they architect their systems to enable separation
of applications from the back-end systems that
support them.
Middleware is being resurrected as the “software
platform”—a way to present data services that
can make it easier to find modular apps that will
perform a particular business function, and to
enable modular apps to combine, like puzzle pieces,
into “systems” in order to implement more complex
business activities.
Companies such as Mashery and Tibco Software
are pushing this data services space with their
platforms to provide an integrated development
environment to rapidly create, orchestrate,
and integrate modular services and business
applications. Other companies such as Apigee are
stepping forward with API management tools that
help make it easier for large enterprises to extend
their reach with mobile apps, create new products
with partners and developers, and more.
The push toward application ecosystemsInsurers should be thinking not only about how
they’ll package apps and services in-house, but
how their apps will interact with their partner
and provider ecosystems. Increasingly, insurance
apps will need to draw on data and services from
multiple sources to provide a customer with a
single-screen solution for risk advice, risk cover and
complementary services.
Allianz’s Ma Sécurité—a free mobile application
providing information to protect people from
major natural and technological risks—leverages
data supplied by the French Ministry of Ecology,
Sustainable Development and Energy, in partnership
with the Department of Prevention to provide a
simple service to customers. Such apps may be
just the beginning. What might happen if insurers
opened the application programming interfaces
(APIs) for their apps to third parties in the ways that
many technology companies already do?
For example, French bank and insurance group
Crédit Agricole has created a financial application
marketplace where third-party developers can
offer mobile and web applications such as personal
finance management tools to Crédit Agricole
customers.xxv Crédit Agricole offers these developers
access to a set of open APIs that enables them to
use the bank’s transactional data to create apps the
bank hasn’t thought of itself. Life and P&C insurers
could benefit from following this example.
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Your 100-day planIn 100 days, begin to develop a comprehensive
strategy that will lay out the foundation for
enterprise app development.
• Appoint a digital champion to coordinate
development of your app strategy across
organizations in your enterprise.
• Start creating a list of enterprise-level apps to
be developed. Work cross-functionally across
business units to prioritize the items on your list.
• Begin architecting consumer-facing apps
to leverage the interfaces and technologies
consumers already use.
The long road ahead As a number of case studies show, insurers are
already getting quick wins by deploying mobile
apps to customers, agents, employees and other
communities. But the end goal of abstraction of
back-end services will be reached through a step-
by-step process, starting with the highest-priority
business needs.
As business users start to embrace technology
and analytics as a way to drive their business
strategies—everything from tools for analyzing
consumer sentiment on social media sites to pilots
of new pricing models—IT must start opening up
the systems, tools, and processes to allow business
users to drive these initiatives forward themselves.
This transformation will allow the enterprise to
move from the paradigm of a backlog of IT requests
from the business to one where IT is empowering
the business to experiment, innovate, and drive its
strategies. Before this state is achieved, insurers
will need to re-examine the skills and organization
structures that must be in place to support the new
arrangement.
Business will be more aware of technology
and its opportunities, and IT will need a better
understanding of the strategic business imperatives
that the technology will drive. Multi-disciplinary
teams made up of user-experience experts, data
scientists, business process analysts/orchestrators
and program manager will become the norm.
More CIOs and IT leaders at insurance companies
will be sitting down with their business colleagues
to discuss how they can help facilitate the new
application development trend. This is a trend that
will be central to catalyzing the transformation of
insurance companies into true digital enterprises.
30
This time next yearIn 365 days, begin the process of implementing the
tools and services to enable the development and
distribution of smaller, more agile and analytics-
enabled applications.
• Begin abstracting your front-end functions from
your back-end services.
• Update your app governance strategy to support
an agile methodology.
• Consider piloting an enterprise app store.
• Based on your pilot results, create a multi-year
road map to deliver your high-priority apps.
• Evaluate the possibility of opening up specific
APIs, and/or pieces of the application platform,
more broadly to the developer community.
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TREND 6
Architecting resilience: “Built to survive failure” must become the mantra of the nonstop insurerIn the digital era, businesses are expected to support the
nonstop demands that their employees and stakeholders place
on business processes, services and systems. As a result,
today’s IT leaders must ensure that their systems—and to
some extent those of their key business partners—are designed
for resilience under failure rather than designed to spec.
32
To take up their roles as tomorrow’s value
aggregators and risk managers, insurers need to
be able to gather and operationalize big data (for
example, from social media, business systems, and
sensors in factories, homes and cars) uninterrupted
and at speed; interact with customers 24 hours a
day through a range of digital channels; and provide
uninterrupted services to their partner ecosystems.
The result is that business continuity and systems
availability matter now more than ever before.
As insurers step up to take a central role in an
ecosystem that provides a range of everyday
services to connected customers, so must they
begin to consider how they will architect their
IT infrastructures to support nonstop business
processes, services and applications. With the cost-
per-minute of data center downtime increasing at
an alarming rate—it climbed 41 percent between
2010 and 2013 according to Ponemon Institute
researchxxvi—insurance carriers must be able to keep
running through any potential disruption, be it a
hurricane, a denial-of-service attack, or a major
systems upgrade.
Insurers are increasingly using digital channels such
as mobile apps and the Web to empower customers
to self-serve, and perform transactions and track
their financial progress. The expectation from
insurers’ stakeholders is that all such services and
platforms will be available all of the time. If they’re
not available when they’re needed, the insurer could
lose credibility and opportunity with its customers,
agents and partners.
Yet addressing the demand for nonstop availability
is far from simple. More business processes are
interconnected and automated right across the
insurance value chain, multiplying the potential
points of failure. More systems are being
integrated—there’s a shift towards multi-channel,
click-to-call customer service and sales operations,
for example—and continuous improvement is
becoming the IT norm.
What’s more, insurers also need to consider the
security and resilience of systems that are used by
third-parties such as agents, claim servicers, data
aggregators, outsourcing service providers and
ecosystem partners. All of this constant change
to increasingly complex systems is introducing
more risk than ever before into the insurer’s IT
environment and business processes.
In addition to traditional dangers such as extreme
weather, civil unrest and other catastrophes,
insurers’ IT infrastructures are also targets for
cyber-criminals who are using increasingly
sophisticated techniques to bring enterprise systems
down. Denial-of-service attacks are becoming more
frequent and more damaging because new tools
are allowing attackers to launch bigger attacks with
fewer resources.
The mindset of resilienceThe more professional and prolific cyber-attacks
become, the greater the role that cyber-security
plays in business continuity. CIOs must use a
business-driven strategy to manage risk across the
enterprise, understanding which assets are critical
and then prioritizing resilience and active defense
measures accordingly.
Resilience does not simply mean putting in place
the right cyber-security structures and deploying
best-of-breed highly available systems. It calls
for a wholesale shift in mindset to the idea of
100 percent uptime. The CIOs who truly get the
concept of resilience have begun transitioning their
organizations and those of their key partners to an
always-on state.
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33
Some examples of the tools and technologies
insurers can integrate into their environments are:
• DevOps tools such as Chef and Puppet to enable
the rapid deployment of new or extended systems
throughout the compute fabric of the enterprise
without disrupting the business.
• Performance monitoring and failure tracing tools
such as Nagios and New Relic, which provide data
center managers with real-time insights so that
they can inspect and troubleshoot their systems,
from source code to hardware components.
• Workload management tools—such as Akka and
Docker—that help to make applications more
portable across heterogeneous infrastructure.
These tools help companies to leverage their
cloud infrastructure investments to build more
distributed and concurrent applications and
services.
• Content delivery networks (from vendors such as
Akamai, CDNetworks, CloudFlare, Cisco, and F5)
are providing businesses with integrated workload
management technologies that allow them to
stay agile all the way to their consumer-facing
activities.
• Software-defined networks (SDNs) enable
organizations to instantly transfer operations to
other online assets, often in automated ways and
without meaningful service interruptions, when
there is a systems failure.
• Sophisticated identity and access management
solutions quickly and flexibly provide and revoke
access to data and applications to end-users.
Knowing that it is neither simple nor cheap to
provide real resilience, they are taking a pragmatic
approach, phasing in resilience over time as business
risk and process economics dictate. And some
are already thinking ahead to the time when their
entire business is digital, cloud-based and always
on. Digital business implicitly increases a company’s
exposure to risk through IT failures.
The time to start architecting for resilience is
right now—not when customers expect it or when
losses in revenue, brand value or trade secrets
have reached painful levels. After the necessary
discussions about risk with the organization’s most
senior executives, IT leaders must begin to map out
the threat models specific to their businesses.
Immediate actionsFor many insurers, a shift towards a more agile and
resilient IT environment is a daunting prospect.
Many still labor with legacy systems built for an
age of batch processing rather than one where
unprecedented volumes of data and transactions
need to be processed in close to real-time. Yet it’s
important to know that many of the tools and
methods to engineer for resilience—to design for an
always-on operation—are available and improving
all the time.
These types of services make IT systems better able
to withstand failure, notifying administrators of
dysfunction, increasing portability, and providing
self-healing capabilities—features that circumvent
the deficiencies of just a few years ago.
34
This time next yearIn 365 days, embark on projects that will reduce
the operational risks of your digital business.
• During the budgeting process, look for security-
and infrastructure-related investments that
maximize business process resilience per dollar
spent.
• Mitigate business downtime risks by aiming
to shift compute loads to public cloud
infrastructure—either during peak times or while
under attack.
• Use results from game-day exercises to create a
prioritized list for operational upgrades.
• Create a security road map to build advanced
detection and external-threat intelligence
capabilities.
Your 100-day plan In 100 days, consider where you can make the
most impact in building a more resilient company.
• Shift conversations about security to
conversations about rapidly identifying and
mitigating business risks.
• Map and prioritize security, operational, and
failure threat models to existing and planned
business operations.
• Develop a strategy to handle elastic business
demand for IT services.
• Create a governance model for auditing and
testing the entire ecosystem of IT system and
process dependencies—both internally and
externally.
ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE
35
CONCLUSION
The insurance industry’s digital opportunity In 15 years, the world has changed at a pace that has left
most traditional insurers behind, whether they’re life or
P&C carriers, and irrespective of whether they focus on
commercial or personal lines of business.
36
Just 10 years ago, Twitter, WhatsApp and Instagram
did not exist. As little as six years ago, most people
used their mobile phones primarily to make phone
calls and send text messages rather than to surf the
Internet and navigate by GPS.
Technologies such as these have blown value chains
apart and reassembled them in new ways that
exclude or disempower the traditional players in
businesses as diverse as media, photography, retail,
and telecommunications. Yet many insurers have
felt insulated from digital disruption by regulation.
The world’s leading carriers, however, are peering
into the future, where they see massive risk and
opportunity from digital trends and technologies
that barely existed a few years ago.
Those that ride the digital wave brought on by
trends such as crowdsourcing, advanced analytics
and visualization, intelligent devices, hyperscale
computing, and modular business apps will be able
to stave off competition from would-be disrupters
and redefine the industry on their own terms.
Forward-looking insurers understand that this
big wave is still in its early stages, but they see
that they could take on new and powerful roles
in the emerging ecosystems. With their strong
balance sheets, their wealth of customer data and
their trusted brands, they are perfectly placed to
interweave digital technologies throughout their
companies to be at the heart of making disruptive
technologies safe realities.
This marks a significant inflection point for the
insurance industry. Here, the leading players will
position themselves as the digitally-enabled giants
of tomorrow, while the laggards risk ceding market
share and revenue to aggressive digital players
ranging from hungry start-ups to entrenched tech
giants such as Google and Facebook.
Now is the time for insurance executives to ask
where their organizations are on their digital
journeys. Though most have adopted technologies
such as digital distribution channels, they have
grafted their digital strategies onto legacy systems,
business processes and business models. Their next
step is to plot the stages of their digital journeys
where they will transform their businesses more
thoroughly.
The pressure applies to both IT and business
executives. The technology imperative is absolute:
it is now time for the CIO’s organization to
decide what role it plays in the emerging digital
business—reinforcing the organization’s technology
backbone while equipping the business side with the
knowledge, understanding, and partnerships with IT
to leverage it.
For the business, it is now incumbent on the leaders
to define their company’s place in the digital world.
They must redefine their relationships with their
customers, partners, and the Internet community
at large; erase organizational silos that restrict
collaboration and data sharing; re-examine the
roles that their enterprise plays in their industry;
and lower the boundaries barring entry to other
industries as potential areas for growth.
The choice for most insurance carriers is this:
transform yourself into a risk manager, advisor
and value aggregator at the center of a digital
ecosystem that delivers high-value services to
customers every day, or be pushed to the periphery
as an interchangeable, commodity service provider
with limited control over your destiny.
ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE
37
Notesi Verizon Buys Hughes Telematics for $612 Million in
Cash, http://www.bloomberg.com/news/2012-06-
01/verizon-to-acquire-hughes-telematics-for-612-
million-in-cash.html, Bloomberg, June 1, 2012
ii Google Closes $3.2 Billion Purchase of Nest,
http://www.cnet.com/news/google-closes-3-2-
billion-purchase-of-nest/, CNET, February 12, 2014
iii How’s My Driving? Gizmos That Track Driving
Habits are Changing the Face of Car Insurance,
http://www.economist.com/news/finance-and-
economics/21572237-gizmos-track-driving-habits-
are-changing-face-car-insurance-hows-my,
The Economist, February 23, 2013.
iv How Progressive Uses Telematics and Analytics
to Price Car Insurance, http://www.cio.com/
article/736686/How_Progressive_Uses_Telematics_
and_Analytics_to_Price_Car_Insurance, CIO,
July 26, 2013. Also Progressive Snapshot Reaches
10 Billion Mile Mark, http://www.businesswire.com/
news/home/20140320005992/en/Progressive-
Snapshot-Reaches-10-Billion-Mile-Mark#.U05d3_
mSxu4, March 20, 2014.
v Policybazaar Launches New Model for Vehicle
Insurance Premium, http://www.business-
standard.com/article/companies/policybazaar-
launches-new-model-for-vehicle-insurance-
premium-113041500214_1.html, Business Standard,
April 15, 2013.
vi 90% of Drivers Would Consider an Autonomous
Car if it Cut Insurance Rates,
http://www.computerworld.com/s/
article/9243858/90_of_drivers_would_consider_
an_autonomous_car_if_it_cut_insurance_rates,
Computer World, November 6, 2013.
vii Autonomous Cars & the Death of Auto Insurance,
http://www.thecarconnection.com/news/1083266_
autonomous-cars-the-death-of-auto-insurance,
The Car Connection, April 1, 2013.
viii A Scenario: The End of Auto Insurance,
http://www.celent.com/reports/scenario-end-auto-
insurance?WT.qs_osrc=nas-122850910, Celent,
May 8, 2012.
ix Will Drone Cargo Ships Sail the Seven Seas,
http://www.businessweek.com/articles/2014-02-27/
rolls-royces-plans-for-drone-cargo-ships-opposed-
by-industry, Bloomberg BusinessWeek, February 27,
2014.
x First Vehicle-Monitoring Devices, Now This,
http://www.insure.com/home-insurance/usaa-
house-monitoring-device.html, Insure.com,
December 10 2012.
xi North America Most Affected by Increase in
Weather-Related Natural Catastrophes,
http://www.munichre.com/en/media-relations/
publications/press-releases/2012/2012-10-17-press-
release/index.html, Munich Re, October 17, 2012.
xii The Climate Corporation, http://www.climate.com/
xiii Building a Fitter Business with Wearable
Technology, http://www.forrester.com/Building+
A+Fitter+Business+With+Wearable+Technology/
fulltext/-/E-RES108942, Forrester, January 6, 2014.
xiv How Allstate Crowdsourced a Vexing Data
Problem, http://www.insurancenetworking.com/
blogs/allstate-crowdsourcing-kaggle-30106-1.html,
Insurance Networking News, March 22, 2012.
xv UnitedHealth Group Innovation Pavilion,
https://www.innocentive.com/pavilion/unitedhealth-
group
38
xvi Accenture 2013 Consumer-Driven Innovation
Survey: Playing to Win, http://www.accenture.com/
us-en/Pages/insight-consumer-driven-innovation-
survey-2013.aspx, Accenture, January, 2014.
xvii The Promise of Better Data Has MetLife Investing
$300M in New Tech, http://gigaom.com/2013/05/07/
with-300m-earmarked-for-tech-innovation-
metlife-wants-to-remake-insurance/, Gigaom,
May 7, 2013.
xviii Worldwide Internet of Things (IoT) 2013–2020
Forecast: Billions of Things, Trillions of Dollars,
http://www.idc.com/getdoc.jsp?containerId=243661,
IDC, Doc #243661, October 2013.
xix Microsoft Now Has One Million Servers,
http://www.extremetech.com/extreme/161772-
microsoft-now-has-one-million-servers-less-than-
google-but-more-than-amazon-says-ballmer,
ExtremeTech, July 19, 2013.
xx An Allstate App Feature Lets Accident Victims
Settle Smaller Claims Digitally, http://articles.
chicagotribune.com/2013-09-24/classified/ct-biz-
0924-quick-claims-20130924_1_app-repair-shop-
policyholders, Chicago Tribune, September 24, 2013.
xxi Taikang Life Insurance Industry Claims
Devaluation Micro-Channel Service Platform,
http://www.ccstock.cn/stock/insurance/2013-06-27/
A1233735.html, CCStock.cn, June, 2013.
xxii Mobile Apps and Digitalization Dominate Top
Insurers’ IT Initiatives, http://www.gartner.com/
document/2664826/meter/charge, Gartner,
February 11, 2014.
xxiii Online Insurance in Japan: Seeking Avenues for
Greater Growth, http://www.celent.com/reports/
online-insurance-japan-seeking-avenues-greater-
growth, Celent, October 18, 2013.
xxiv High Performers in IT: Defined by Digital,
http://www.accenture.com/Microsites/high-
performance-it/Documents/media/Accenture-High-
Performance-IT-Research.pdf, Accenture, 2013.
xxv Open API for Bank Apps: Can Credit Agricole’s
Model Work Here?, http://www.americanbanker.
com/magazine/123_8/open-api-for-bank-apps-
can-credit-agricoles-model-work-1060535-1.html,
American Banker, July 29 2013.
xxvi Study: Data Center Downtime Costs $7,900
Per Minute, http://www.datacenterknowledge.
com/archives/2013/12/03/study-cost-data-
center-downtime-rising/, Data Center Knowledge,
December 3, 2013.
About the Technology Vision study for 2014Every year, the Technology Vision team at
Accenture Technology Labs, with the Accenture
Research organization, pinpoints the emerging IT
developments that will have the greatest impact
on companies, government agencies, and other
organizations in the years ahead.
This vision is distilled from Accenture’s extensive
research over the course of the previous year, along
with input from technology experts and analysts.
The conclusions are then tested for relevance
within insurance by consulting with clients, industry
analysts and our own subject-matter experts.
ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE
39
Copyright © 2014 Accenture All rights reserved.
Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
About AccentureAccenture is a global management consulting,
technology services and outsourcing company, with
approximately 289,000 people serving clients in
more than 120 countries. Combining unparalleled
experience, comprehensive capabilities across all
industries and business functions, and extensive
research on the world’s most successful companies,
Accenture collaborates with clients to help
them become high-performance businesses and
governments. The company generated net revenues
of US$28.6 billion for the fiscal year ended
Aug. 31, 2013. Its home page is www.accenture.com.
For more informationJohn Cusano Senior Managing Director, Global Insurance Industry, Accenture [email protected]
Mark Halverson Managing Director, Distribution Services Accenture Financial Services [email protected]
Edwin Van der Ouderaa EALA Digital Go-to-Market Lead Accenture Financial Services [email protected]
Andrew Starrs Group Technology Officer Accenture Financial Services [email protected]
www.accenture.com/insurance www.accenture.com/technologyvision
14-2263U