The internet of things (IoT) will disrupt global insurance markets according to Accenture. The management consulting firm says “Insurers will need to dramatically reshape their business model, combining insurance with technology, ecosystem services and partners”.
According to the company the IoT is driving a connected, as-a-service economy, and forcing change upon the sector. For their part, the insurers already overwhelmingly agree, with 80 per cent saying they expect the IoT will disrupt their traditional way of doing business.
Accenture has identified three dimensions of the sector it says will be most affected:
- Consumer Expecting not just a product but a unique “always-on” service oriented experience
- Offerings and risks Moving from product to service, without ignoring the impact of new risk pools.
- Competition New competitors creating contestable markets from unexpected industries.
Insurance companies will need to decide if they prefer the role of service provider where they focus on supplying innovative technology-based insurance products to a third-party ecosystem of if they are value aggregators where they will need to launch innovative and extended offerings, beyond traditional insurance, and directly selecting and managing the partners they need, according to the authors of the Accenture paper.
The report called Are you ready to be an Insurer of Things? argues that “The traditional business model for insurance, though still a tremendous source of revenue, is becoming less sustainable in the long term1 due largely to the rapid innovation that the Internet of Things is driving throughout the economy.”
The authors say market participants are about to become “Insurers of Things.”
“Every industry is being disrupted by the Internet of Things (IoT)— the universe of intelligent devices, processes, services, tools and people communicating with each other as part of a global ecosystem. As technology evolves, products, homes, enterprises and entire cities will be continuously connected .”
As the IoT drives a connected, as-a-service economy, traditional insurers will need to decide whether to move up or out, they say.