45% of global insurers believe that connected devices will be driver of revenue growth in the next three years: Accenture

Insurers are accelerating their plans to become more digital, driven by increased adoption of Internet of Things (IoT) technologies, data and analytics tools and digital-first distribution models, according to a report released on Wednesday by global professional services company Accenture.

The report, titled Reimagining insurance distribution: Insurers accelerate the shift to a radically different distribution model and based on a survey of more than 400 insurers globally, found that nearly half (45 percent) of insurers believe that connected devices will be a driver of revenue growth in the next three years.

Accenture Research surveyed 414 senior insurance executives across Europe, the Americas and Asia Pacific to determine how they are transforming their distribution models to increase customer engagement and meet customer expectations. Respondents were mostly C-level executives and directors responsible for sales, distribution and marketing and digital strategy at personal lines, small commercial lines, life and multi-line insurance companies with at least US$1 billion in annual premium volumes.

The report said that while much of the early adoption of technology was in vehicle telematics, there has been a significant increase in other IoT related products over the past year. Just last year, most carriers said they were not interested in, or had no concrete plans to, engage IoT connected insurance tools, and only a minority had any IoT plans related to home/buildings (cited by 14% of respondents), health/fitness (10%) and other wearables (4%). In this year’s study, this has more than tripled as nearly four in ten insurers surveyed said they have piloted or launched a connected home/buildings offering (cited by 39% of respondents), a health/fitness offering (39%), as well as other wearables such as smart watches (37%).

Accenture said in a statement that introducing products and services based on IoT technologies is among the top investment priorities for insurers these days, with another being the improvement of data and analytics capabilities. Nearly half of carriers already launched or are piloting projects using open data and big data analytics tools, and 58% said it is a high priority to use customer analytics at the point of sale. [click image below to enlarge]

“Insurers are using customer data obtained from IoT connected devices and applying analytics to make insight-driven decisions on how to better engage with customers and offer more relevant products and services aligned with their needs,” said Erik Sandquist, managing director for Accenture Distribution and Marketing Services in North America, in the statement. “IoT technologies provide an abundance of data on customer behaviors and preferences. Carriers that analyze and use these new sources of customer data have a significant advantage over the competition, and will be best placed to offer ‘living services’ – which allow companies to personalize the customer experience and better respond to the evolving customer needs and desires as they develop in real time.”

Survey respondents said using connected devices to create more personalized insurance coverage for customers is of top importance for driving revenue growth in the next three years. Carriers are embracing a customer-centric approach to create needs-based services – more than half (59%) expressed the urgent need to move to a customer-centric model to remain competitive in the future. Nearly two-thirds (63%) said that moving toward needs-based selling is a high priority, and advanced analytics will be an enabler for needs-based selling.

More than half (52%) of insurers said they expect to have a wholly digital sales process within the next three years – only one in four have this in place today – while only about one in five said they have no plans to implement a wholly digital sales process. Today, 32% of property and casualty personal line insurance quotes and advice are provided completely through digital channels – the figure is 27 percent for life insurance. Both are expected to increase by approximately 10 percentage points in the next three years.

This trend also extends to small commercial insurers, which expect 38% of quotes to be delivered digitally and almost one quarter (24 %) of sales processes to be fully digitized from end to end, in the next three years.

As carriers shift more transactions to their digital channels, they are also rethinking how they will involve agents moving forward, Accenture said. Today, nearly two-thirds (63%) of carriers are more selective involving agents only in the stages of the sales process where they add the most value, including increasing sales of more profitable products. As a result, 79% of insurers are redesigning their remuneration model or discussing how to create a new model to fit their new omnichannel distribution approach, as well as refocusing recruiting priorities based on the ability to cross-sell (50%), advisory skills around complex products (48%) and ability to build rapport with customers (48%).