From the impact of advances in motor vehicle safety technology and the broadening use of global positioning systems, to new approaches in capturing data, forward-thinking insurers will develop fresh ways to interact with customers, agents, and employees by leveraging unprecedented insights into their wants and needs.
The potential impact of innovation on the insurance industry extends far beyond the use of faster computers and a browser-based customer experience. TowerGroup believes six principles will drive the insurance industry toward innovation over the next decade: changing the user interface; capturing contextual data; using technology from adjacent industries; collaborating with users; making infrastructure agile; and managing risk dynamically.
For example, event data recorder technology used by manufacturers to improve the performance of air bags will see increased use by claims organizations to correctly assign fault in accidents and prevent fraud. By 2012, global positioning system technology will provide huge volumes of data that insurers can use to improve pricing accuracy, even opening the door to create dynamic pricing that varies with location risk.
This transformation will be fueled by increased investment in technology infrastructures, with spending on IT development projects by the global insurance industry rising from $1 billion (USD) in 2006 to $1.25 billion by 2010.
The TowerGroup report titled âThe Digital Chauffeur: Real-World Principles of Innovation for the Insurance Industry,â authored by David West, research area director of TowerGroupâs Insurance practice, addresses the technology shifts that will drive massive industry changes impacting both insurance carriers and technology vendors.