Although insurers are always investing in and exploring new tools, technologies can take several years to go from “emerging” to “mainstream.” Even technologies like artificial intelligence (AI) and big data, which insurers have long understood to have value for understanding risks and customers more effectively, still aren’t ubiquitous.
Novarica closely studies how insurers in our Research Council use emerging technologies. Over the course of several years, some patterns have emerged in how new technologies grow.
When new technologies emerge in the industry, insurers typically respond with one of a few main strategies: Some insurers will adopt the technology in limited pilots to experiment with it; others will wait to see if those early adopters demonstrate value before moving in; and some insurers may determine that the technology isn’t a good fit for them.
Emerging technologies’ varying rates of deployment and growth depend on a few key factors:
- How easy the technology is to understand and how long it needs to be developed to create real value;
- How the technology integrates with existing processes and how easily it can be deployed; and
- How much value the technology creates and how easy that value is to understand.
For example, take robotic process automation (RPA), which has had a meteoric rise in insurance, doubling in deployment over the last several years. RPA is readily added to existing processes, and because it replaces human interaction, its impact can be measured with the same KPIs the insurer is already using to assess process output and efficiency. It’s relatively easy to deploy and creates immediate, clear value.
Compared to something like RPA, AI and big data have longer maturity cycles: Algorithms have to be trained, and sometimes the best use cases aren’t immediately apparent. Getting real value from these technologies can require rethinking processes. They’ve grown more slowly but steadily because they provide value but take time to mature and integrate.
It’s useful for insurers to understand how emerging technologies take hold across the industry so they can better benchmark the value their own technology pilots are creating with their organization, particularly when several options are competing for budget. When focus needs to tighten, communicating that valuable technologies can have longer paths to maturity can keep insurers focused on end goals.
Add new comment