Technology is changing the face of insurance – but could the very technology that promises to measure driving habits on a granular level spell the end of auto insurance as we know it?
That was a possibility hinted at by Donald Light, the director of Americas P&C Practice with Celent, at yesterday’s Insurance-Canada.ca Executive Forum in Toronto, Ont.
“We may be looking at a dramatically smaller auto insurance industry,” said Light, in response to a question from the floor by Wendy Watson, the president of the Organization of Real Time Brokers Implementing Technology (ORBiT), asking how telematics devices and usage-based insurance will affect insurers. “The underwriting will always be there; but how auto insurance is distributed will change.”
The presentation by Light, ‘
How the Internet of Things is Going to Change the Insurance Industry,’ looked at how an increasingly connected world is allowing people to exchange a massive amount of digital information, and how that data is yielding predictions, feedback and control, and considerable challenges for insurers.
“The Internet of Things, or IoT, will considerably affect product design, pricing and policyholder service,” Light told delegates. “There will be some change to underwriting and to claims.”
Michael Costonis, the managing director, insurance industry for
Accenture, opened the forum by examining the waves of change that are bringing challenges and opportunities to brokers and insurers.
And some of the North American numbers of consumer tastes were tough pills to swallow - numbers that accurately reflected Canadian consumer tastes, said Costonis.
“Sixty-seven per cent said that they would consider buying from someone other than traditional insurers,” Costonis said. “That speaks to client relationships that are stuck in product silos. There is an awareness of a need for change in the industry, with 48 per cent of those in the P&C market and 23 per cent in the Life sector recognizing there is a need to change. Unfortunately, insurers also said they are not sure where to start that change.” (continued.)
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Breaking down the numbers, Costonis said that of the 67 per cent who indicated they were open to buying insurance outside of the traditional channel, 43 per cent would turn to banks; 23 per cent to online; 20 per cent to home service providers; and 14 per cent to retailers.
That is why the insurance industry needs to get up to speed on the mountain of data that is being produced, says Costonis, and to better understand what it is that today’s client is looking for.
“If you don’t have data and analytics about your customer,” he said, “you are essentially flying blind.”
