It is important for solution providers to have a firm point of view on which emerging technologies matter most to insurers. This understanding should be reflected in their story about how these technologies add value to the insurer’s business.
Recently, Novarica’s vendor client community discussed Novarica’s latest Emerging Technology in Insurance report and voted on which emerging technologies were the most important to insurers at this moment. Among more widely deployed technologies, participants selected big data (tech and data sets) as most important. Among less widely deployed technologies, participants identified IoT/wearables/telematics as most important.
Big Data
According to Novarica’s report on emerging technology, most insurers have expressed some interest in big data—deployment and pilot activity have consistently been in the 40%-50% range for several years. The idea of applying big data to solve enterprise problems has become well established over the past five or so years, though finding the right technology and application can be challenging. Like any data warehousing project, there can be usability issues, but what makes big data unique is that the data normalization and mapping challenges tend to fall to reporting and analysis, which have more tools and the ability to use their tools more iteratively.
IoT/Wearables/Telematics
Only about one-third of property/casualty insurers offer or are piloting telematics programs. Many IoT initiatives are currently in very specialized areas. Telematics is unique from many other emerging technologies in that the appeal is less about the technology itself and more about the value proposition in trading cheaper policies for more/better data. Some carriers believe that providing discounts to policyholders in exchange for better data helps refine the underwriting process, thus justifying the cost.
Big data and telematics have very specific benefits to insurers, but for vendors who may offer other emerging technologies, business justification can be determined by reflecting on the following key questions:
- What is your solution?
- What value does your emerging technology bring to your solution and to the carrier?
The answer will vary across type of solution provider. Vendors selling a core system may not need to demonstrate emerging technology capabilities as much as non-core systems vendors, which may be directly selling one of these technologies. All vendors, however, will need a story on how they will support these emerging technologies in the future. Even for consulting/SI players, insurers will expect that the provider is prepared to help implement one of these emerging technologies should it interest the carrier.
The best strategy for vendors is to ensure that emerging technologies have been woven into their story about business value. Linking supported technologies back to one of the Three Levers of Value and answering how their tech helps insurers sell more, manage risk better, or cost less to operate will help vendors craft relevant and compelling stories about the latest technology.
The next Virtual Vendor Town Hall for Novarica clients and invited guests will take place on March 3. To register, or to learn more about the event, check out the event’s page or contact Jeff Goldberg at [email protected].
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