Insurers urged to 'obsess' over innovation

Consultancy Accenture has listed five key trends it believes will shape the insurance industry this year as the pressure on insurers to innovate intensifies because of increased competition from insurtechs and other new entrants.

The five trends are: artificial intelligence (AI), embedded ecosystems, physical health and wellness, workforce transformation and green policies.

Accenture says the trends identified are based on submissions received last year for the annual insurance innovation awards organised jointly with global financial association Efma.

It says by listing the five trends, it hopes to inspire Australian insurers to show their best work and make innovation an “obsession” this year.

“Prior to the pandemic years, the Australian insurance sector was not innovating at the same rate as its European and American counterparts,” Accenture Insurance Lead Australia and New Zealand Marianne Hutchinson said.

“This was not because of a lack of willingness or capability, but mainly a lack of necessity.”

The status quo has since changed, she says, partly because customer expectations have changed.

“Australian insurers’ traditional ways of operating have meant that it has taken longer for the local market to be disrupted by new entrants and influenced by global trends,” Ms Hutchinson said.

“However, this is changing fast. Consumer behaviour is demanding change, insurtechs are growing, and macro risks like climate change are challenging industry players to reinvent how they work.”

Ms Hutchinson says AI is increasingly becoming an enabler of innovative customer experiences for insurance providers.

In the US market for example, Generali Global Corporate has partnered with Ticinum Aerospace to develop a tool using geospatial datasets and AI to enhance underwriting, pricing, and risk modelling resulting in more accurate insurance protection for its customers.

“We have seen AI used incrementally across the industry, but to really benefit from this technology, an immersive application across the value chain is necessary,” Ms Hutchinson said.

On embedded ecosystems, she says insurance companies are likely to continue to seek out partnerships to strengthen their offerings.

Accenture research shows 84% of insurance executives say ecosystems are an essential strategy while 54% are looking to “embed” partners to bolster their business.

“We expect insurance companies to continue growing and leveraging ecosystem partnerships to expand on relevant customer touchpoints and harness new data to optimise existing resources,” Ms Hutchinson said.

On physical health and wellness, millennials are not the only ones interested in digital offerings, Accenture says. Older consumers are increasingly open to it, a trend that picked up during the pandemic.

“The pandemic has only accelerated demand for digitally-enabled, end-to-end health and wellness solutions, and insurers have continued to expand their roles within the holistic wellness space,” Ms Hutchinson said.

She says the insurance workforce went through an “incredible transformation” in the last 18 months in response to the pandemic and predicts insurers will continue to invest in cloud-enabled tools and other technologies to support remote working.

“Collaborative processes and digital tools were critical in this transition,” Ms Hutchinson said, adding they will be “permanent features” of the insurance workforce going forward.

Likewise there will be no turning back the green transition as insurers press ahead with their climate action programs.

“We can continue to expect a shift to focus on sustainable products and investments to sustainable operations in the year ahead,” Ms Hutchinson said.

“In the long term, sustainability will mark the start of a new mission for insurers to demonstrate a broader, greener purpose and help make a difference to the communities they serve.”