Insurtech in P&C: It's Not About the Tech

Insurers are acutely aware that a whole host of emerging technologies are poised to change the industry, in some cases dramatically. It is both exciting and scary for industry executives to contemplate the implications of driverless vehicles, artificial intelligence, the Internet of Things, wearables and many other important technologies. It is also easy to get wrapped up in the technology. What features do the latest wearables provide? What advanced tech capabilities are being built into vehicles today, and how soon will the age of driverless vehicles arrive? How should we assess the various AI-related technologies such as robotic process automation (RPA), chatbots, machine learning and a laundry list of others?

There is no question that understanding the technologies themselves is important, but, from an insurance point of view, it is not about the technology – it is about what the technologies mean for customers, risks and operations.

SMA’s recently released research report, Emerging Tech in P&C: Insurer Strategies and Plans Through 2020, explores 13 key emerging technologies in depth. A survey of industry executives yields insights about insurer strategies, plans and investments for each technology, along with expectations on how far-reaching the impact on insurance may be.

All of these technologies are important in one way or another. The key is in understanding which areas of the business have the potential to leverage various technologies, and how rapidly (or slowly) the adoption of each technology is likely to occur. Assessing business area implications and potential use cases is straightforward, but determining adoption rates falls into the area of educated guesses. Nonetheless, it seems clear to many in the industry that AI, drones, the IoT and driverless vehicles are a few of the emerging technologies that will have the biggest impact on both personal and commercial lines insurers. Others that have received a great deal of press, such as blockchain and wearables, are also important, but, for these, there is less activity among insurers than for the others.

The timeframe question is beginning to take shape, as well. Drones are here and now. A high percentage of both personal and commercial lines insurers have either already deployed drones or are building strategies to use drones (for both inspections and claims). AI and the IoT also have many projects and investments underway. There are also many partnerships with insurtech startups that have solutions based on those technologies. Driverless/autonomous vehicles are expected to have a larger impact on the industry than any other technology, with premium levels predicted to fall dramatically. However, the technology progress, testing, laws, regulations and the adoption of vehicles with these capabilities faces a long ramp up over the next 10 to 20 years. The implications are enormous for the industry, and there is time and opportunity to build strategic plans and reorient the industry.

This blog just scratches the surface on emerging technologies and what they mean for P&C insurers. The bottom line is that all P&C insurers, across all lines, need to be actively following the developments and thinking about the implications for business strategy.