In today’s world, Internet-enabled devices and systems use technology to make sure we can track and communicate with anything, at anytime, from anywhere. In fact, a new Frost & Sullivan report projects that the global sensors market will generate more than $162 billion by 2019. This trend, often defined as “The Internet of Things” (IoT), is driving digital disruption across all industries – and the insurance industry is no exception.
A growth of “insurtech” investments and an upsurge in mobile devices has shaken the insurance industry to its core. According to the “Pulse of Fintech” Q2 2016 report, recent venture capital-backed insurtech investments spiked to $2.5 billion of investments in 2015, up from $700 million in 2014. With these new insurtech tools at their fingertips, consumer expectations of insurance providers have completely changed. For example, with peer-to-peer platforms such as Friendsurance, buyers are now able to come together and form a “social network” online to create their own risk pools. And digital insurance market exchanges such as Cover allow insurance shoppers to obtain quotes instantaneously from their cell phones.
If insurance providers don’t adjust their business models to meet these new consumer expectations, they will lose valuable business. Despite this urgency, according to a survey conducted by Ernst & Young, 79% of insurance companies are still lagging far behind in digital adoption. Completely transforming core aspects of how insurance transactions are conducted can be an overwhelming task for many providers. But the road to digitization does not need to be a daunting one. If approached strategically, it can be a valuable differentiation tool for insurance providers looking to acquire new customers and lead the market.
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