Industries
Insurance
Reinventing the Insurance Industry with a Digital-first Strategy
Solution
Consulting
TCS Consulting Services to Achieve Success in the Digital Era
Highlights
- The impact of technology has been felt across the insurance value chain be it for new offerings, distribution, underwriting, policy administration, claims management or customer service
- These technological trends impacting insurance industry fall into three generic buckets – AI imperatives and risks, new frontiers of computing and human-machine synergy
- These trends will hugely impact players in the insurance industry spurring new forms of innovation and enhanced decision making
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Introduction
Technology-led innovations driving growth
Insurance firms have been on their modernization journey leveraging cloud, analytics, and machine learning since couple of years now. Innovative offerings like embedded insurance, usage-based pricing and parametric insurance have been possible by strategically adopting Cloud, AI/ML and APIfication. As we progress into the future, these technologies will become foundational to drive growth and innovation agenda. These technological trends are poised to build on the collective foundations of these early investments. By leveraging these insights and trends, insurers can position themselves to thrive in a rapidly changing landscape, ensuring resilience, innovation, and growth in 2025 and beyond
The 2024 Gartner® Top Strategic Technology Trends for 2025 states that “we’ve identified the 10 strategic technology trends that will have the most impact in the next five years and beyond — trends that span AI imperatives and risks, new frontiers of computing and human-machine synergy.”* In our opinion, these trends will hugely impact players in the insurance industry spurring new forms of innovation and enhanced decision making.
Relative Impacts
The impact of technology has been felt across the insurance value chain be it for new offerings, distribution, underwriting, policy administration, claims management or customer service.
The ten top strategic technology trends will impact both life and non-life insurance, although to varying degrees since the use-cases will differ, and the regulatory environments are also distinct. For instance, data from wearables will likely have more utility for hyper personalization of individual health policy. Similarly, images from satellite data are expected to impact the property and casualty (P&C) line of business to a higher degree, by underwriting climate risks more accurately.
Figure 1 provides an insight into the relative impact of the ten technology trends on key business processes at an insurance firm. The impact is classified as high, medium and low based on current maturity and key features that the technology offers. Also highlighted are a few examples of high impact use-case under each category. Many of the use cases will of course use a combination of technologies to elicit the right business value.
Figure 1
Relative Impact of Strategic Technology Trends on Insurance Value Chain Processes
Figure 1
As can be analyzed from above, AI imperatives and risks, and new frontiers of computing have a deeper impact on the insurance industry, given their ability to reimagine product development, enable resilient operations and enhance customer experience.
Future Possibilities
While the technologies will impact all the processes, insurers may see more profound impact on new offerings, underwriting, customer service as well as risk and compliance functions.
A brief view on the three thematic trends is provided below.
- AI Imperatives: As per the TCS AI for Business Study, 94% of insurance executives have AI implementations planned, in process or already completed. From touchless claims to smart contact centers and developer Co-Pilots, many insurance carriers are leveraging predictive and generative AI for their IT as well as business transformation. The trend will be pervasive with widespread adoption of machine learning (ML), production grade deployments of Gen AI and a responsible AI framework being a cornerstone of these deployments.
- New Frontiers of Computing: Hybrid computing and Internet of Things (IoT) based sensing are seeing increased traction to create new offerings, introduce usage-based models and bring in predictive capabilities for insurance carriers. Adoption of energy efficient platforms like neuromorphic AI and impact of quantum computing are still seen a few years away.
- Human Machine Synergy: The insurance industry is seeing very early use of technologies like Extended Reality, Brain Computer Interface (BCI) and Polyfunctional Robots in their day-to-day business functions. However, it is only a matter of time before experimentation on web3 and neurological enhancements will start at some of the leading and innovative organizations.
The Future Beckons
Technology-led transformations are the norm in today’s environment and play a pivotal role across the functions of insurance carriers. Most of the insurance firms, at least in the developed economies are on their multi-year transformation journeys. With the pace of technology changes accelerating, they now need to be on a perpetual path of innovation. Collaborating with leading technology players and investing in the right set of strategies, business use cases, innovation frameworks and AI guardrails will help them be always ahead of the innovation curve. Investments needs to be evaluated from the prism of how the insurers would like to move up the value chain in terms of both the quality of interactions and promotion of a safe and healthy ecosystem for end users.
Insurance players who intelligently evaluate and embrace the technology trends in the context of their business, will be at a competitive advantage and reap the benefits of efficiency and automation. The question is no longer whether insurers will adopt these technologies, but how quickly and effectively they will do so to stay competitive in a dynamic market. The ones who wait and watch on the fences without driving an innovation strategy will see themselves soon being disrupted by players not only from their own industry but even by Insurtech as well as entrants from other industry ecosystems.
Which innovative use-cases are you planning to strategise on soon?
*Gartner, Top Strategic Technology Trends for 2025, Gene Alvarez, 21 Oct 2024
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