Multi-national asset and management consultant, Accenture, has released a new report on the state of the insurance industry, suggesting that all those involved should be offering telematics based products, or at the very least, considering their implementation in the future and generating a business model around their development.
Announced over the weekend in a report entitled: “Insurance telematics: A game-changing opportunity for the industry,” Accenture claimed that a roadmap for how telematics could impact their business should be something every insurer already has in place and if not, it needs one as soon as possible.
It also goes on to offer insight into the three most obvious approaches that an insurance firm can take to telematics:
- Wait and see: This is the most conservative of Accenture’s proposals, with the management consultant suggesting for the bare minimum of of consideration relating to the technology. Insurers falling into this camp should still develop a theoretical business model around telematics, as chances are in the future they’ll find themselves considering the technology with more seriousness.
- Take an interest and experiment: This is the most common tactic used by insurers and is perhaps the most cost effective and forward thinking of the lot, since it accepts the currently relatively low uptake of telematics hardware, but considers where it might go and lays the ground work for more implementation in the future.
- Gain first move advantage: This is the most advanced and comprehensive move and relies on the company getting there first and offering the best telematics related deals. It has many benefits, but runs the risk of introducing costumers to telematics, before the then take up a deal with another company down the line.
Accenture’s report also discusses in frank detail, the current limitations on technology and how those will fall away in the coming years. IT infrastructure as a whole is also broken down, showing how if your business isn’t equipped to deal with the mountain of data that is set to come in, you’ll need to renovate that aspect of the business also:
“Much of the burden of a telematics program will fall on IT and insurers’ technology platforms,” Accenture said. “An honest, rigorous assessment of a platform’s ability to collect, organise and store vast quantities of data is essential to any program launch. Insurers cannot afford to underestimate the difficulties of data capture and its application for the business.”
However it’s a unified approach that Accenture was recommending, whichever route you go down. While IT will need to have a big overhaul if you want to do a lot of the data processing in house, or at least hook up with whichever third party telematics or analytics company you sign on with, every other aspect of the business will also need to be on the same page. Marketing will need to be able to advertise your new services, or look into customers that might be interested in a limited trial of the technology. There’s also other departments like underwriting and claims that will need to be brought up to speed. Telematics is a comprehensive change in an insurer’s strategy and structure, but it’s one that needs to be considered even if it is on a “wait and see” basis.
“Insurers that ignore telematics do so at their peril,” Accenture said in conclusion. “It is neither a fad nor a mere addition to insurers’ pricing and underwriting capabilities. Rather, telematics represents a disruptive, transformational technology that has the power to reshape the global motor insurance industry, dramatically altering every aspect of the insurance value chain from marketing to claims processing.”
[Thanks CA Underwriter]