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Disrupt or be disrupted
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Once futuristic concepts – wearable technology that tracks behavior and promotes healthier
living, apps and devices that record driving patterns, in-home and building sensors that
monitor environmental conditions, drones and other geographical information systems – have
become here-and-now phenomena. While their current adoption is not widespread, early
adopters have made clear that these technologies are ready for integration into market value
propositions and standard operating procedures.
The growing adoption of these technologies — and the usage-based, “pay-as-you-live”
business models they enable — confirms that the insurance industry has reached a tipping
point. The right bold action can lead to significant value creation in the very near term, while
“wait-and-see” delays or insufficient change will leave insurers even more competitively
vulnerable.
To understand how insurers view the risks and opportunities of sensor data and other new
data sources, EY surveyed senior executives from nearly 400 insurers around the globe,
as well as 1,400 firms from other sectors, including banking, electronics, retail, telecom,
automotive and other sectors. The survey addressed both current practices and plans for
tomorrow.
The results make clear that forward-looking and top-performing insurance organizations
are already innovating with telematics, wearable technology and sensor data, though not
to the extent of leaders from other sectors. Why is sensor data so important to insurers in
particular? On the strategic front, it presents a clear and compelling opportunity to re-
engineer the fundamental value proposition through transformative product innovation to
benefit customers and shareholders.
There are also significant tactical advantages across the enterprise, with performance
improvement opportunities at the core of the business:
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Assessing risks more precisely and empowering underwriting teams
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Designing products faster and pricing them more profitably
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Connecting with customers more directly and relevantly based on greater visibility into their
changing needs
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Revolutionizing claims handling and service experiences
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Maximizing profitability through better targeting
Of course, non-traditional insurers from outside the industry have similar access to — and in
some cases ownership of — these capabilities and technologies, which greatly increases the
imminent threat to current insurance leaders.
Executive summary