From Digital Wallflower to Digital Disrupter

Accenture Technology Vision 2014 for Insurance

Every Insurer Is a Digital Insurer

Six trends that will shape the future of insuranceThe 2014 edition of the Accenture Technology Vision highlights

six IT trends that will have a transformative effect on businesses

over the next three to five years. Collectively, these themes

represent the newest expression of Accenture’s stance that

“every business is a digital business”.

01 Digital–physical blur: Extending intelligence to the edge

02 From workforce to crowdsource: Rise of the borderless enterprise

03 Data supply chain: Putting information into circulation

04 Harnessing hyperscale: Hardware is back (and never really

went away)

05 The business of applications: Software as a core competency

in the digital world

06 Architecting resilience: Built to survive failure

2

Insurers must ride the next surge of digital disruption A new wave of disruptive digital technologies has broken and insurance carriers cannot ignore the opportunities and threats that this brings.

Those that win the race to transform into digital

insurers will find opportunities to disrupt their

existing markets as well as to drive new revenues

and profits in industries and customer segments

where they have not traditionally competed.

Those that don’t get out of the starting blocks

quickly enough will be outrun by more aggressive

insurers—and they may also lose market share

and profits to tech companies, automotive

manufacturers, and other companies pioneering

emerging technologies that undermine the

traditional insurance business model at its

foundations. The choice is a stark one: become a

disrupter or be disrupted.

Consider, for example, how much trust some

consumers have in organizations such as Google

and Facebook or the brand loyalty that some

automobile manufacturers command. Now look at

insurance, where customers have little loyalty—and

will switch providers simply to save a few dollars a

month with little to entice them to stay.

Accenture researchi finds 67 percent of insurance

customers would consider purchasing insurance

products from organizations other than insurers,

including 23 percent who would consider buying

from online service providers such as Google and

Amazon. Fifty-two percent would prefer to apply

for or purchase insurance online. That’s a sobering

thought for insurers in a world where the disrupters

are coming to market with innovations that don’t

simply modify or accelerate the industry but

redefine it.

In the case of insurance, radically different offerings

may even find ways around the capital and

regulatory requirements that burden traditional

insurers. The competitive threat is not that the

consumer may buy insurance cover from Google or

Ford—it is that he or she might buy a driverless car

with a cheap extended warranty and may no longer

require a conventional auto insurance plan at all.

ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE

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Waves of innovation Companies from industries as different as telecoms

and automotive manufacturing are coming to

market with products and services that might

subvert traditional approaches to assessing risk,

distributing insurance products, and settling claims.

Verizon has launched Verizon Telematics to

offer safety and diagnostic telematics and fleet

management services—a move that positions it as

the potential owner of relationships with consumers

that need vehicle cover. Google, meanwhile, has

acquired smart-thermostat and smoke-detecting

hardware company Nest, readying itself for the

smart home of tomorrow.ii What might that mean

for home insurers?

Against this backdrop, forward-thinking insurers

are assessing the role they have to play in enabling

disruption and embracing innovation. Without

someone to assess, manage and mitigate new

risks, many innovations and disruptions will not

become commercially viable. Until there’s insurance

coverage for driverless vehicles that provides for a

shift of liability from consumer to manufacturer,

they will not be able to take to the roads.

Rather than fearing the upheaval the driverless car

will bring to their market, insurers should be looking

at how they can enable it. This is the type of creative

destruction of old business models that will allow

tomorrow’s insurance giants to lead their markets,

often becoming more profitable in the process.

The process of change might be painful—

regulatory compliance and cultural inertia are

major obstacles—yet insurers also have many

assets that will help them to achieve their digital

transformation. With their deep resources, strong

balance sheets, enormous scale, stockpiles of data

and process discipline, insurers are primed to take

a leading role in new ecosystems that connect

customers to a range of products and services.

Traditional insurance may be only one of the sticky,

everyday services in such an ecosystem, which will

draw together a range of companies and services.

Tomorrow’s connected insurer can reposition itself

to play a positive daily role in the customer’s life.

To the individual consumer it could be a life coach,

a personal trainer, an advanced driving teacher, a

risk manager and more; to commercial customers it

could be a business consultant providing business

insights, and other advice ranging from security to

securitization.

The digital wallflower steps upCarriers must be agile to build more effective

alliances and joint ventures with partners from

a range of industries, and create new value

propositions for their customers. They should learn

from other industries as they create innovative

customer experiences, products and services that

are relevant and personalized. And they should

aim to become part of the insured’s everyday life

as value aggregators, advisors, and facilitators of

a range of other services rather than simply being

there when a premium is paid or a claim is filed.

4

Insurance, as market research company Fjord puts

it, has traditionally been a digital wallflower—out

of the mainstream and slow to adopt the latest

advances. Though the insurance industry is in

the middle of the pack when it comes to digital

transformation, some leading insurers are already

disrupting their markets by leveraging digital

technologies.

An Accenture client, a large financial services group,

has adopted a digital-first approach to designing all

new customer-facing systems. When it builds new

consumer engagements, it starts off by considering

the attributes of the mobile device its customers

take with them wherever they go. Tapping into the

camera, GPS, and other features of the customer’s

tablet computer or smartphone, this group is able

to deliver highly automated, always-on customer

experiences. From the customer’s point of view, he

or she can find an agent, submit a claim, make a

bank deposit, get roadside help, and access a wealth

of value-added services from one screen, at any

time. That positions the group well for the next set

of disruptive digital technologies.

Despite regulatory obstacles and organizational

cultures that reinforce conservatism, insurers

that are not as well advanced with their digital

transformation strategies can start moving in

the right direction. They can start positioning

themselves in the foreground with their customers

so that they’re less likely to be disintermediated

or marginalized over the next five to 10 years as

emerging technologies mature.

Some will launch new teams with a culture of

innovation and make a core competency of rapid

prototyping of new apps, and services that can be

quickly connected to legacy systems. Others will

establish intrapreneurial groups or innovation labs

within their businesses to incubate breakthrough

innovations or foster data monetization. Certain

insurers might use their balance sheets to provide

venture capital to the start-ups that are nurturing

the technologies of the future that will need to be

insured in order to become a safe reality.

A few may even open themselves up to the

possibility of disaggregating the value chain

by providing their back-office capabilities and

processing backbones to other brands. They’ll accept

that they’re not leaders in developing technologies

or building consumer brands, instead partnering

with organizations that excel in those capabilities.

There is no single approach that will be right for

every insurer. However, standing still in such a

rapidly advancing environment will most certainly

be wrong.

Without someone to assess, manage and mitigate new risks, many innovations and disruptions will not become commercially viable.

ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE

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TREND 1

Digital–physical blur: Extending intelligence to the edge The real world is coming online as smart objects, devices

and machines increase our insight into and control over

the physical world. More than just an “Internet of Things,”

it’s a new layer of connected intelligence that augments

employees, automates processes, and incorporates

machines into our lives.

6

From wearable computing to home sensors and

vehicle telematics, our world is being reshaped

rapidly by intelligent interfaces that blur the

physical and the digital. The quantity of these

connected devices is increasing as dramatically as

their prices are dropping.

The technology in these interfaces is constantly

improving, giving them richer functionality. This

allows them to take advantage of the cloud to

share data with other “edge” devices—those whose

edges touch each other, enabling unprecedented

connectedness. It also allows them to sense

environmental variables, and feed analytics engines

and visualizations so that organizations can make

smarter decisions in real time.

Over the next five years, the proliferation of

intelligent edge devices is likely to bring massive

disruption to the insurance industry. Digital-

physical blur promises to transform the industry by

giving insurers usage and contextual data they can

use to refine risk, redefine products and transform

customer relationships.

Forward-thinking insurers are not only integrating

existing trends such as vehicle telematics into their

business models, but they’re considering what the

next wave of disruption—perhaps most dramatically

illustrated by the autonomous car—will mean for

their businesses. And carriers that started off with

pay-per-use insurance offerings are moving toward

mobile, contextual and behavior-based products.

Start-ups such as Insurethebox and Drive like a

Girl have entered the market to focus exclusively

on highly targeted markets with telematics-based

products and services. Traditional insurers around

the world—from Hyundai Marine & Fire Insurance

Company in Korea to Aviva in the UK—are also

already integrating vehicle telematics into their

businesses.iii

Progressive in the United States, for example, uses

telematics data to assess individual driver risk and

rewards safer drivers with low premiums.iv With more

than 10 billion miles of vehicular and behavioral data

to draw on, Progressive can use metrics such as when

and how far you drive, and how frequently per mile

you hit the brakes, to personalize your premium.

In India, Policybazaar.com has carved out a new

business for itself by using Chleon’s insurance-

telematics-as-a-service to calculate future motor

insurance premiums for car drivers.v With the

driver’s permission, his or her personal driving score

can be provided to insurance companies that have

accepted this score as a rating factor. Leading global

commercial lines carriers, too, are refining their risk

engineering through sophisticated fleet telematics

programs.

This is just the beginning for P&C insurers, which

must contemplate what the implications will be for

their businesses when a significant proportion of

the private cars and corporate fleets on the roads

are replaced by safer autonomous automobiles that

marginalize human driver error in the underwriting

equation.

Driverless cars—upheaval for insurance Google and Nissan claim their driverless cars are

just five to six years away. Public policymakers are

already preparing for the driverless car—the US

states of California, Nevada, Michigan, and Florida

have already passed legislation to allow driverless

cars on their roads.

ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE

7

Driverless cars will introduce massive upheaval

to the auto insurance industry. CarInsurance.com

postulates that if just 10 percent of all vehicles in

the US were self-driving, the number of accidents

each year would be cut by 211,000. This would save

1,100 lives and cut the economic cost of accidents

by $22.7 billion.vi

What’s more, liability will shift from drivers to auto

manufacturers and technology firms, while the

risks that need to be managed will be increasingly

centered on technology failures and cyber-security

breaches rather than on human error. Implementation

of autonomous technologies in just 20 percent of

cars on the road could be enough to cause a seismic

shift in the auto insurance market by significantly

reducing the number and potential severity of claims,

in turn lowering risks and premiums.vii Market

researcher Celent believes total auto physical-

damage premiums could drop by 30 percent from

2013 to 2017 and by 80 percent from 2018 to 2022

as a result of the rise of the driverless car.viii

Consider the possibility of Internet firms or auto

manufacturers using the data they gather from

these cars to offer insurance and risk management

services to their customers at premiums lower than

today’s insurers are able to offer, or completely on

a pay-per-use basis. Car manufacturers could sell

insurance as part of an extended warranty, while an

organization like Google could position itself as the

owner of the insured customer relationship.

This reality means insurers will need to refresh their

well established distribution, rating, claims and non-

underwritten services to prepare for a new world.

Analytics and data management infrastructure will

be a must to intelligently handle the massive flow of

data into their organizations.

Their claims organizations will need to become

smaller and more specialized. Product managers

will need to rethink the way they design products.

And distribution may shift from the insurer’s

direct and agent channels to partners such as auto

manufacturers and mobile operators.

Beyond the driverless car and the autonomous

vehicles already in wide use in heavy industries

such as mining, the unmanned ship might be one

of the next major changes in the global transport

industry. Rolls-Royce Holdings has created a virtual-

reality drone prototype in Norway with the goal of

eventually allowing captains on land to command

fleets of crewless ships. Rolls-Royce argues that

drone ships would be safer, cheaper and more

environmentally friendly than today’s vessels.ix

Under international conventions that set minimum

crew sizes, ships that don’t comply are considered

unseaworthy and hence uninsurable. But that

could change, bringing massive disruption to the

commercial insurers that provide maritime cover.

After all, the European Union is already funding

a €3.5 million ($4.8 million) study of unmanned

vessels.

What might it mean for commercial insurers if

crews could no longer be held hostage by pirates,

if cameras and sensors helped reduce accidents

at sea, if there was no need to provide workplace

insurance for crew members? As in the instance of

the driverless car, the unmanned ship could change

the face of risk and cover in a massive industry.

Once again, the need for insurance may shift from

the operator to the manufacturers and IT firms that

provide the vessel and its electronic systems.

Celent believes auto insurance premiums could drop by 30% from 2013 to 2017 and by 80% from 2018 to 2022 as a result of the rise of the driverless car.

8

Home is where the sensors areThe digital-physical blur is also creeping into the

home, and many insurers are starting to take note.

One tantalizing example of what the future may

hold: a smart refrigerator might provide health

insurance discounts for storing ‘health’ food.

Perhaps insurers could include food retailers into

the ecosystem to replenish customers’ refrigerators

when food runs low, and notify them when produce

reaches it expiry date.

Smart carpets that detect falls are being developed

with the infirm and elderly in mind. That could be

a boon for health insurers, which could save costs

and shave precious seconds in medical response

times by getting an alert when the homeowner

collapses on the floor. These carpets can be set to

alert the police if anyone walks on them when the

homeowners are away.

Another sign of the times: USAA recently patented

a home data recorder that can track temperature,

wind speed and mechanical vibrations as they affect

the house, and humidity which could cause mold

in the walls.x As this type of data becomes more

available and prevalent, home insurance pricing

becomes much more interesting.

The smart edge of industryIndustrial companies, meanwhile, have led the

adoption of smart edge devices over the past five

years, improving efficiencies with technologies

ranging from radio-frequency identification (RFID)

tags in supply chains to robotics and remote

monitoring and control in oilfield and pipeline

operations. This trend brings with it a host of

opportunities for commercial insurers—but also

some threats in a market segment where risk

assessment and pricing have traditionally been

complex and opaque.

Building owners, property managers, and industrial

equipment vendors are all are adopting integrated

solutions such as continuous commissioning systems

that make use of sensors throughout a building’s

workspaces and mechanical equipment to collect data

with millisecond resolution on building performance.

Data from sensors in factories and other industrial

plants could predict and then alert the insured to

the risk of the imminent failure of an expensive piece

of equipment. Carriers could package insurance

policies with maintenance plans from equipment

suppliers, offer customers lower premiums if they

manage their equipment proactively, and monitor

adherence to agreed parameters.

According to Munich Re, the 2012 drought in the

US was, for reinsurers, one of the costliest crop

insurance events on record.xi In future, insurers

might start to look towards systems that enable

irrigators to monitor water-use quotas, set

alarms to indicate high/low usage rates, and track

meteorological and crop data so that they can stay

ahead of the market impact of such events and

begin to predict rather than just react to it.

For example, Climate Corporationxii helps to protect

and improve farming operations with data analytics

software, insurance products and risk management

services. It provides hyper-local weather monitoring,

agronomic data modeling, and high-resolution

weather simulations to farmers, supplementing the

U.S. Federal crop insurance program. It also offers

the climate.com web and mobile service to provide

real-time data for field-level monitoring, yield

forecasting, crop insights and decision support.

ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE

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Consumer wearables to shape behaviorBeyond the commercial and personal P&C sectors,

the digital-physical blur has some profound

implications for health insurers. Thanks to

falling prices and miniaturization of microchips,

consumer wearables such as Nike’s FuelBand,

Adidas’s miCoach, and Fitbit are rapidly becoming

commonplace.

These devices track exercise and physical activity

in ways that allow users to easily gain insight into

their performance—often in real time. This gives

them information they can use to make decisions

about picking up the pace, going for another lap,

or pushing for a personal best. Herein lies the

opportunity to reward insurance customers for

healthy behavior.

Blue Shield of California, for example, uses FitLinxx’s

Pebble device in its activity program. The company

offers incentives linked to the user’s health

insurance benefits, along with social games to drive

participation. And the EveryMove rewards program,

in partnership with insurance companies like the

LifeWise Health Plan of Washington, tracks behavior

through wearable computing and rewards users

with points that can be used for branded goods,

services, or even discounts on insurance rates.xiii

Already, life insurers are harnessing this information

to assess an applicant’s physical activity level and

general health when pricing premiums.

Privacy implicationsTo take advantage of these new technologies,

carriers must respect their privacy implications. The

key is to notify individuals about how their activities

are being assessed, give them the choice of opting

in, and explicitly share with them the choices of

actionable information at the decision.

These aspects are crucial. Privacy issues are likely

to keep making headlines as privacy watchdogs

jump in to defend against unauthorized tracking

of consumers. An insurer that builds a reputation

for using data-driven insights to provide valuable

services while using consumers’ personal data in

trustworthy ways will have big advantages over

competitors.

Its brand will be more valuable, it will have more

opportunities to attract and retain lifetime

customers, and it can become a preferred partner

in a larger value chain of goods and services.

Leading insurers must start considering how they

can position themselves at the heart of customer

experiences and information flow enabled by the

digital-physical blur—or risk a slow loss of their

most potentially valuable interfaces with the

customer to non-traditional competitors.

10

This time next yearIn 365 days, you should step up your business

agility by pushing decisions to the edge:

• Consider teaming with a firm outside the

insurance industry to pilot a new offering.

• Develop a big-data/analytics infrastructure to

support the data velocity and insight needs of

digital–physical projects.

• Address potential data privacy issues as new

pilots and projects are developed.

• Start planning for known technology disruptions

coming down the pipeline. Example: plan for

driverless cars in 2020.

Your 100-day planIn 100 days, promote decisions at the edge by

completing the following:

• Define how consumers engage with your

products and services and the locations where

they engage.

• Look to innovators outside of financial services

to identify opportunities to enhance consumer

experiences and enable field workers.

• Consider building labs or intrapreneurial groups

to experiment with business models and

technologies underpinned by the digital-physical

blur.

• Re-evaluate your corporate privacy policy to

address the new cyber-physical interactions for

your business.

• Start consulting with regulators and policymakers

about the regulatory implications of cyber-

physical interactions.

ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE

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TREND 2

From workforce to crowdsource: The rise of the borderless enterprisePicture a workforce that extends beyond your employees,

one that consists of any user connected to the Internet.

Cloud, social and collaboration tools and technologies now

allow insurers to tap into vast pools of human resources

across the world, many of whom are motivated to help.

12

When US insurer Allstate wanted to solve the

perplexing problem of creating a better model for

predicting bodily injury liability based solely on the

characteristics of the insured vehicle, it turned to

the Kaggle crowdsourcing platform to supplement

the skills on its own payroll.xiv This powerful network

of experts has solved tough data challenges from

airline flight optimization to retail-store location

optimization for some of the world’s largest

organizations, including GE and Facebook.

By offering a $10,000 cash prize as an incentive,

Allstate inspired 100-plus teams made up of more

than 200 members of Kaggle’s global network of

computer scientists, mathematicians and data

scientists to come up with a better algorithm. The

winning entry was 271 percent more accurate than

Allstate’s existing method for predicting claims

based on vehicle characteristics.

This is just one example of how digital collaboration

technologies are no longer just about enabling

insurers to collaborate more effectively within the

boundaries of their own enterprises—they are also

connecting them to smart, enthusiastic people in

the outside world who have the interest, motivation,

time and expertise to work with insurers to solve

some of their most daunting business challenges.

An insurer’s workforce today needn’t be restricted

to the people on its payroll or bound by its culture,

but can include nearly anyone in the world with an

Internet connection. Thanks to digital platforms such

as Kaggle, InnoCentive, Elance and oDesk, there is a

vast world of online labor to tap for tasks ranging

from designing a new logo to helping create the

breakthrough products and services of tomorrow.

Not as new and radical as it seemsFar from a radical idea, crowdsourcing is a proven

concept that has already impacted the businesses

of many insurers. What is the open-source software

movement besides the original expanded workforce,

made up of pioneering thinkers who come together

to solve business and technical problems in a

freeform, collaborative manner? The success of

open-source software proves conclusively that

there’s no shortage of people willing to work with

other individuals and organizations to solve problems.

They are surprisingly ready to work for little

or no money if they get other rewards: prizes,

recognition, fame, the sense of pride in creating

something useful. Indeed, from the Kickstarter

crowdfunding platform to Kaggle, there are millions

of people worldwide ready to get involved in online

experiments, contests, challenges, and more.

But few executives in insurance have, to date,

fully grasped the idea of accessing a truly liquid

workforce—pools of premier talent gathered in

virtual communities and coalescing around specific

business problems. This expanded workforce likely

offers expertise that is not immediately available

in-house. It also offers scale—it can be leveraged to

solve problems that may be too large, too expensive

or too counter-cultural to solve creatively internally.

The crucial point is that this expanded workforce

is not to be confused with employing contractors

or temporary labor, or moving to an outsourcing

arrangement. The channels, structures and

transactions are entirely different—far more fluid

and versatile than any familiar labor model.

ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE

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The world is the focus groupThe paid workforce isn‘t going away because not

every problem is best solved by crowdsourced

solutions. But the use of crowdsourcing promises

to firms’ employees a new source of information

and ideas that they can use to improve customer

service, create stickiness and drive innovation.

Insurers could also use crowdsourcing tools and

approaches to harness ideas and innovation across

departmental boundaries.

Considering that there are thousands of people

willing to provide rich insight into insurance

products and the consumers that buy them, insurers

will be better able than ever to predict how the

market will react to their products and who will buy

them. They can segment markets more discretely

and test value-added features to see who will pay

for them. Suddenly, the focus group is made up

of potentially tens or hundreds of thousands of

real-world consumers rather than 125 selected

attendees.

It’s still early days for the use of an expanded

workforce, and being a borderless enterprise brings

its own challenges. For instance, the inherent

transience and anonymity of the expanded

workforce significantly limits traditional human-

resources activities such as job training. And it

raises many thorny questions about the security of

intellectual property.

Unleashing innovation Innovation has emerged as a C-suite issue for all

insurers. Yet many are impeded, as they try to

fast-track innovation, by an organizational culture

focused on predicting risk and complying with

regulations. They lack the sort of creative thinking it

takes to disrupt established industries and markets.

That’s where the crowd could have a powerful

role to play in shaping the insurance business of

tomorrow.

Because innovation is happening organically

everywhere, insurers should be looking beyond

the borders of their own enterprises for the

innovations that could transform their businesses.

This open approach allows them to tap into ideas

their conventional workforces may not be able to

conceive of, and solve old problems in new ways.

Take the case of UnitedHealth Group in the US,

which uses the InnoCentive crowdsourcing network

as one source of innovative, customer-centric

thinking.xv It asked the InnoCentive community

to come up with innovative new concepts for its

members’ online experiences to supplement the

thinking of its own innovation group.

In insurance, the foundations for effective

crowdsourcing strategies are in place. Most insurers

have some presence in social media, where they

interact with customers transparently and in real

time. Accenture research indicates that 55 percent

of customers would be interested in insurance

products and services offered on social media.xvi

One potential leap forward is to invite participants

in their social media channels to help improve their

products in more collaborative ways. This is a way

of learning from people who use their channels

and products, while creating a human connection

between consumers and the insurer.

14

Yet some best practices have already emerged

for the successful use of crowdsourcing to solve

business problems. Planning must be diligent, the

brief must be explicit, and complex tasks must be

clearly and logically broken down into sub-tasks

that can be parceled out to the crowd in a way

that allows them to be reintegrated into the overall

product or project.

Despite these challenges, the opportunity is

immense for insurers that are willing to step up.

Those that get it right will find themselves with

better insight into their customers and an increased

agility to retool themselves with the skills necessary

to respond to the changing technology landscape.

Your 100-day planIn 100 days, begin to create a strategy for

harnessing the crowd.

• Since insurance lags crowdsourcing trends, look

at industries such as technology and consumer

brands for inspiration.

• Evaluate the potential benefits of using expanded,

collaborative workforce platforms and toolsets to

support your analytics, market research, product-

development, and innovation functions.

• Develop an initial strategy to engage existing

online communities in support of core functions

such as market research and product development.

This time next yearIn 365 days, be familiar with the various types of

crowdsourcing platforms that apply to your business.

• Identify which tasks are most easily broken into

smaller independent tasks ahead of launching a

pilot project.

• Establish a pilot to evaluate the value of tapping

into a different workforce and set of skills to the

ones you have in your current organization.

• Understand the types of specialized skills that

cause surges in demand for your organization.

Determine whether adoption of expanded

workforces can resolve these surges and re-

evaluate your hiring structure in response.

ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE

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TREND 3

Data supply chain: Putting information into circulationTo truly unlock the value of their data, insurers must start

treating data more as a supply chain, enabling the data to

be accessed and then to flow easily and usefully through

the entire organization—and eventually throughout the

organization’s ecosystem of partners too.

16

Insurance leaders today view data as among

their most valuable assets—some even call it the

lifeblood of their organization. That’s why they’re

implementing the newest big-data tools, investing

in advanced analytics applications, and purchasing

the latest data visualization software.

Yet the reality is that these easily become one-

off data fixes that contribute to data silos rather

than provide an end-to-end data solution. Few

insurance companies have mastered the concepts

at the foundation of modern data management—

ideas such as the mobility and portability of data,

its structure and velocity, and data as a “saleable”

product or monetization. Fewer still are comfortable

with these concepts at scale.

High performing insurers, however, will embark on a

journey to ROI; they will liberate their data, generate

value from it, and operationalize insights to drive

strategic decisions through the organization. Key to

their success will be managing their data like any

core product—in the context of a supply chain.

The supply chain begins when data is created,

harvested, imported, or combined with other data.

The data then moves, flows, and transforms through

the supply chain, incrementally acquiring value.

The supply chain ends with a valuable insight as its

output. Guiding this movement is a federated data

services platform, which unifies data from multiple

systems into a single view and enables business

users to interact with the data in a standardized way.

Enabling data movementOne example of an insurer that has done just that

is Metlife, which has invested in a new database

system and application called The Wall.xvii The

system brings together data from a number of

disparate legacy sources and merges it into a single

record for customer-service representatives. The

interface looks and functions just like Facebook,

meaning that new hires don’t need to be trained on

complex enterprise software. In future, customers

could be allowed access to the same application to

answer their own questions.

Data access on its own isn’t enough—velocity is

needed too. Quick access to valuable data means

that analytics can be performed, insights can be

gained, and actions can be taken in the sometimes

very small window of opportunity available to

businesses.

Historically, IT professionals have given precedence

to “hot” (high priority) data—data that is accessed

frequently and saved onto high-performance

systems that can store and retrieve it very quickly.

For “cold” data—tax records, say—they have used

slower disk hardware or even tape backups in legacy

systems.

Newer prioritization practices improve data

acceleration by adding many more gradations

of “data temperature”—or data tiers. Tiered data

solutions allow for time-critical and commonly

accessed data to be stored in data-centric caching

structures, optimized for quick transport through

the supply chain.

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The next step is to enable dynamic movement of

data through these tiers, meaning they can be

“heated up” or “cooled down” at any time. Data

velocity is improved by the ability to seamlessly

change priority over time, based on business

need—but it’s also an efficient and cost-effective

capability. This makes sense when businesses

consider the wide range of how, when, and how fast

users need to consume data.

More uses for more data sourcesThe supply chain process starts with ingesting or

harvesting data. These days, companies can tap

into a wide variety of new data sources—including,

notably, data that they do not control or own.

Whether this external data is to be obtained from

partners, data-as-a-service providers, or open

data sources, companies should capitalize on the

business value that these new sources provide. To

do so, they must build embedded analytics teams

with knowledge of the business problems the

enterprise is trying to solve.

Insurers have a head start here, since they were

working with data from third parties before it

came in vogue. They have long leveraged data from

data aggregators such as credit bureaus to inform

decisions about customer risk rating, for example.

Now, the next step is to look at augmenting these

sources with social media sentiment, weather data,

and more.

This data can be used to inform better decision-

making within the insurer’s enterprise, and it can

also be used to add value to the customer’s life. For

example, an auto insurer could leverage traffic data

in its mobile app or data from another vehicle in

close proximity to warn insured drivers of accident

hotspots or traffic congestion. A home insurer,

meanwhile, could use data from a connected home’s

sensors to notify the owner of a potential fire.

The process of discovering new insights to answer

business questions is changing fundamentally as

users get faster access to more data. Now, when

data is manipulated as it moves through the supply

chain, value can be added to and obtained from

it in ways that were previously impossible. This is

because data discovery techniques allow businesses

to discover answers to questions that they might

never have known to ask in the first place.

Previously, traditional business intelligence methods

were the only way to answer prescribed business

questions; they require multiple lengthy steps

before a solution is possible. Now, however, data

discovery helps users to rapidly discern the very

questions that companies should be asking by

uncovering insights in a visually interactive and

rapidly iterative manner.

So that businesses can better “communicate” with

and analyze data, analytics is being embedded in

data discovery and visualization tools (as it is in

applications)—effectively enabling data scientists

and less-technical business users alike to do

analytics and data discovery more easily and

intuitively.

Data discovery techniques allow businesses to discover answers to questions they might never have known to ask in the first place.

18

The next step: cognitive computingAs the volume and variety of data grow, so too

do the scale and complexity of the data supply

chain, making it increasingly difficult to add to and

get value from data as it is manipulated. What if

machines could be taught to leverage data, learn

from it and with a little guidance, figure out what to

do with it?

That’s the power of machine learning—which is

a major building block of the ultimate long-term

solution: cognitive computing. Cognitive computing

incorporates components of artificial intelligence

to convey insights in seamless, natural ways to help

humans or machines accomplish what they could

not on their own.

Although complex, large-scale cognitive computing

may be beyond the reach of most insurers, there

are some cognitive computing capabilities that can

be put to work in practical and affordable ways.

Companies should focus on tackling well-defined

problems on a smaller scale—where machine

learning techniques can be leveraged to accomplish

practical cognitive computing goals.

For example, insurers could use natural language

processing to transform unstructured data, such

as social media posts or claims submitted in free

text, into insights. Streaming data—ranging from

news to weather information—could help insurers

to better respond to catastrophes or improve risk

management on behalf of their customers.

Monetizing dataBy the final stages of the supply chain, companies

have new opportunities to capitalize on its value.

From forging new partnerships to creating new

revenue streams, or even entering new markets,

insurers now have more potential than ever to

realize the true value latent in their data.

Now, companies can take advantage of the

opportunities for data monetization—to sell data

insights directly, share them through partnerships,

or develop entire ecosystems around them. Insurers

have the opportunity to think outside of the box

for new ways to appreciate and take advantage of

the true value in their data—provided they do so in

a way that is sensitive to the thorny issue of data

privacy.

Life and P&C insurers have data of such value and

richness that they have many potential avenues for

monetization. Who knows more about the assets

that a customer owns, and is in a better position

to create a range of cross-sales and lifestyle

opportunities around this information than their

insurer?

Insurers could extend data they collect from

telematics devices or wearables into their ecosystem

of partners to offer even richer data about

customers’ behavior and context. In addition to

ecosystem partners and aggregators, insurers could

even sell data to their own customers or offer it to

them as a value-add—for example, usage patterns

of commercial vehicle fleets.

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Your 100-day planIn 100 days, begin to develop a comprehensive

strategy around laying the foundation for your

data supply chain.

• Ensure you have a data governance framework

in place to address data quality, metadata

management and master data management.

• Build an inventory of your data, beginning with

your most frequently accessed and time-relevant

data.

• Focus on dark (under-utilized) and unstructured

data rather than falling prey to big-data hype.

• Start looking for external data sources that

complement existing data.

There are no shortcuts in the data supply chain.

But it is also one of the most rewarding journeys

that companies can make in their transformation

to become truly data-driven. Progress becomes

possible when the transformation process is viewed

as a matter of small steps rather than one giant

leap. Expect leading insurers to start by establishing

a data services platform, followed by implementing

a single data supply chain for a specific outcome.

Once that’s done, they will incorporate another—

and another.

Even those insurers that have only just begun to

think about their data in the context of a supply

chain can begin with tactical implementations

that deliver value rapidly off limited investments.

They can start off with small projects with clear

key performance indicators rather than building

or re-architecting massive data warehouses or

marts, using agile tools such as self-service business

intelligence to get data rapidly into end-users’

hands. They can also start with data audits to

understand exactly what data treasures they may

have hidden deep within millions of customer

records or file handler notes and narratives.

The return on investment may not be immediate.

However, this process can prepare an insurer to

become a digital disrupter by putting data together

quickly, logically and at scale to mine it for relevant

insights into risk, claims, and customers. Having this

type of data supply chain mentality and capability

will give the insurer an edge over its competitors.

20

This time next yearIn 365 days, begin the journey to ROI by building a

supply chain that is designed to drive outcomes.

• Begin to simplify and federate access to trusted

data.

• Target a proof of concept (PoC) to execute on a

targeted business-function problem and iterate.

Repeat many such PoCs over the next year,

putting the most successful into production and

moving all the while towards industrialization.

• Investigate opportunities to monetize your data.

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TREND 4

Harnessing hyperscale: Hardware is back (and never really went away) Eclipsed by more than a decade of innovation in software,

the hardware world is now a hotbed of new development as

demand soars for bigger, faster, more efficient data centers.

Every company will see the benefits of “hyperscale”

innovation trickle into its data center in the form of cost

reduction.

22

Wearable computers, onboard computers in

automobiles, sensors in homes and in factories,

and other edge devices are multiplying at an

unprecedented rate in consumer and enterprise

markets alike. IDC predicts there will be about

212 billion devices in the Internet of Things and

some 30 billion connected autonomous things

installed by 2020.xviii Data generated by such

devices—added to data from social media, third

parties such as credit information providers, and

insurers’ own digital channels and contact centers—

is quickly becoming a deluge that threatens to

submerge insurers’ legacy IT systems.

As all of this information begins to be collected

every day, every hour, and, in extreme cases,

multiple times per second, the systems insurers will

require to store and analyze this data at speed will

need to be sized at a scale that was unimaginable

just a few years ago. Welcome to the world of

hyperscale computing—super-sized, super-scalable,

and highly resilient systems designed to crunch

through vast volumes, variety, and velocity of data

at rapid speeds and with great efficiency.

As insurers embrace the digitization of their

business processes and the imperative to leverage

customer data for competitive advantage, they will

need to look at the latest innovations in the world

of hardware to enable the digital transformation of

their businesses.

It is to the giants of the Internet—among them,

Google, Microsoft, Facebook, and Amazon—that

they must look for inspiration for their next

generation of computing infrastructure. Each of

these runs infrastructures made up of hundreds of

thousands of servers.xix

These data-dependent companies have pioneered

the adoption of innovative technologies such as

low-power processors, solid-state data storage,

and in-memory computing to build data centers

that consume storage, bandwidth, memory, and

computing cycles on a massive scale at significantly

reduced operational costs.

The next generation of IT hardware As insurers strive to deliver connected services

to always-on customers and partners and master

the challenges of big data, they will benefit vastly

from the renaissance in hardware innovation. To

get started, technology leaders at insurers need to

ask themselves, “What could our business do with

unlimited computing power that can be turned

on and off as needed?” Then, they must think

about how their organizations can tap into flexible

computing power to meet the needs of the business

at the lowest possible cost.

With many insurers in the process of conducting

cloud computing proof-of-concept projects, the

new wave of hardware innovation is raising some

interesting questions for their CIOs. Over the next

five years, every large IT department will face the

choice between leveraging external clouds and

building big-data-oriented computing infrastructure

on-premise.

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To what extent can the data center scale up as

companies start collecting billions of miles in

telematics data? Could the insurer use hyperscale

computing to leverage data from connected

devices, social media, and other big data sources so

it can constantly reassess the risks of commercial or

private properties it covers? The choice of hardware

appliances or alternatives depends very much on

what the specific application needs are, and what

the usage patterns will look like. As such, solutions

must be tailored for individual cases.

In most cases, insurers will have heterogeneous

requirements that will be best served using the

correct recipe of commodity versus specialized

hardware and private versus public cloud

architecture. This means that, out of necessity and

for the foreseeable future, enterprise infrastructures

will be hybrid solutions—weaving hyperscale cloud,

on-premise, specialized hardware, and an enterprise’s

existing systems into a computing fabric that serves

more parts of the business in more demanding,

reliable, and scalable ways than ever before.

CIOs are at point where decisions on public

or private cloud, as well as commodity versus

specialized hardware, could become significant

differentiators. For some, hyperscale hardware

appliances will be the key to high performing IT

infrastructures that are able to evolve quickly

enough to keep up with the pace of digital

transformation. Yet on-premise choices are capital

intensive and increasingly specialized.

Clouds are complexWith the exception of the largest global financial

services groups and the biggest national insurers,

many insurers are likely to opt for a cloud-based

model to give them the performance they need. But

choosing the cloud does not remove the complexity

from the decision-making process.

How CIOs make this choice will depend significantly

on the systems they require. A life insurer may need

highly resilient services that fluctuate little during

the workday, but it may demand more of those

services at the end of every month or at the lapse of

policy terms. A P&C insurer with pay-per-mile auto

coverage may require real-time decisions based

on vast quantities of data. To choose wisely, CIOs

will need to understand how the service providers’

underlying hardware will impact its performance.

How will a cloud provider’s use of low-power CPUs

in its data centers affect operational costs over the

contract term? Can the organization’s applications

run on low-power CPUs, or would specialized

graphics processing units be more efficient for

computation? Does the code for its critical business

insights need to be rewritten to take advantage of

these new technologies?

24

This time next yearIn 365 days, be prepared to have your IT road map

include hyperscale technologies.

• Update models of your digital business’s most

demanding computing processes to understand

the advantages, trade-offs, opportunities, and

risks of hyperscale hardware choices.

• Create a hyperscale task force.

• Build the reference architectures for hyperscale

workloads and evaluate the applications that are

deployed to hyperscale.

Your 100-day planIn 100 days, make sure your organization

is informed about the available hyperscale

technology options.

• Ensure that your IT organization is aware of the

latest hardware innovations.

• Identify your data storage needs and the

magnitude of devices producing data in your

network (including sensors, smart meters,

devices, and data centers). Forecast their

expected usage based on one-year and three-

year business growth strategies.

• Create a plan that allows key data assets to be

portable across architectures.

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TREND 5

The business of applications: Software as a core competency in the digital world Mimicking the shift in the consumer world, enterprises are rapidly

moving from applications to apps. As organizations push for

greater operational agility, there is a sharp shift toward simpler,

more modular and analytics-enabled apps.

26

The way insurers build and deploy software has

changed dramatically over the past decade.

Where they once relied on big, monolithic

software systems to run their businesses, they

have increasingly turned towards componentized

CRM, agency, claims, policy administration and

rating applications that are extremely agile, highly

configurable and able to run on commodity

hardware.

Where upgrading a claims or policy platform was

once a multi-million dollar project that could

take two years or more, today such a project can

be broken into smaller chunks so that value can

be delivered at milestones measured in weeks or

months rather than years. Now, the next wave of

software innovation has arrived, promising even

more flexibility and simplicity.

Mimicking the appetite for mobile apps in the

consumer market, enterprises are starting to deploy

lighter, simpler, more modular and analytics-enabled

apps to end-users within their organizations as well

as to their customers and business partners. This is

a trend that promises to have a profound impact

on insurers as they reinvent themselves as digital

disrupters.

Those that have the ability to rapidly develop, or

partner to create and launch new applications in

today’s turbulent markets, will be best positioned

to innovate, collaborate, improve customer

experiences, and enrich personal interactions.

Indeed, some leading insurers are already using

mobile apps to interact and transact with customers

at scale, in a personalized manner and in ways that

add value to the customer’s life.

Enterprise mobility is one opportunity for insurers

to improve productivity and reduce costs, especially

when it comes to field surveys, and claims

processing and settlement. Insurance companies

have also been able to mobilize the claims process

with consumer-facing apps that link to their

enterprise systems. Allstate’s recently launched

QuickFoto Claim app allows a customer to take

pictures of a vehicle with minor accident damage

and get the claim processed without needing to see

an adjuster or go to a dealership.xx

And Taikang Life in China is leveraging a mobile

multi-media text and voice messaging app for

claims in a manner that improves efficiencies

and customer service.xxi Its customers simply use

WeChat—China’s largest mobile social messaging

platform—to report an accident. Customers take

photos, input information and send it through to

the insurer for remote assessment. A small, standard

claim might be settled in as little as 15 minutes.

Insurance as a positive part of everyday life P&C insurers, challenged by high churn rates, are

now considering how apps can help them retain

customers. Lifestyle apps that encourage risk-

friendly consumer behavior—for example, regular

exercise as monitored by fitness trackers, or careful

driving as reflected by telematics data—could

help improve customer retention and reduce

the frequency and size of claims. Users could be

rewarded with lower premiums, discounts and

coupons with ecosystem partners, or loyalty points

for participating.

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Because the smartphone or tablet computer is

location-aware and nearly always with the user, it

creates many interesting ways for insurers to weave

their brands and services into customers’ everyday

lives. In the world of commercial insurance,

American International Group (AIG) has created a

mobile app for business customers that subscribe to

its data-breach liability cover product, CyberEdge.xxii

The app gives users information on cyber-risks and

how to help mitigate and respond to them.

With mobile apps, the insurer is there with the

customer when he or she needs risk management

advice or even impromptu risk cover. As a result, we

see the insurance industry shift from the paradigm

of a policy covering an insured object—a car or a

life—towards risk cover bought for an insured unit

such as a mile or a day. Insurers and new market

entrants have a significant opportunity to disrupt

the market by creating new insurance management

systems that work by the unit of coverage and that

are tightly linked to context-aware digital sales and

delivery channels that price and monitor the user’s

coverage.

Just look at how Tokio Marine & Nichido Fire

Insurance in Japan is using mobile apps to sell

prepaid insurance by the day to people who don’t

own a car and drive only occasionally. When a user

is borrowing or renting a vehicle, he or she can

simply buy Choinori Insurance on the spot (literally,

insurance for “driving just a bit”) via a mobile phone.xxiii Young drivers who buy this product as they need

it can accumulate no-claims discounts that will be

applied to their first full auto insurance policy. And

in India, insurers have been selling life and pension

cover by SMS for several years. Customers can top

up their cover when they have a few rupees to spare

by sending a text message from any GSM handset.

Consumer apps for enterprise useApps are not just about delivering services to

customers—they also have a role to play in offering

employees and agents access to enterprise systems

and data in the sort of intuitive interfaces offered

by the mobile devices and social platforms they use

every day. That means IT groups at insurers should

be building software platforms and architectures

that essentially separate the big back-end services

from the applications that users interact with.

A big and positive consequence of the shift toward

an enterprise app world is that business functions

are partnering with technology organizations

to assume joint ownership of the new agile

applications. The back-end services—from data

centers to networks—still fall squarely under IT,

but in more and more organizations, the lines are

blurring as the business takes a more active role in

many aspects of front-end applications.

Increasingly, insurance apps will draw on data and services from multiple sources to provide customers with a single-screen solution for risk advice, risk cover and complementary services.

28

This trend is clear in the movement toward

enterprise app stores. Gartner predicts that by 2017,

a quarter of all business enterprises will have an

app store for managing corporate-sanctioned apps

on PCs and mobile devices. The top performers

are already leading the way: Accenture’s High

Performance IT research confirms that 54 percent

of high-performance IT groups have deployed a

mobile-enterprise app store, compared with just

22 percent of other IT organizations.xxiv

The flexibility and power of these apps is revealed

when they’re combined and connected in ways

that create a customized system capable of

handling larger business tasks. Software vendors

and enterprises alike are already changing how

they architect their systems to enable separation

of applications from the back-end systems that

support them.

Middleware is being resurrected as the “software

platform”—a way to present data services that

can make it easier to find modular apps that will

perform a particular business function, and to

enable modular apps to combine, like puzzle pieces,

into “systems” in order to implement more complex

business activities.

Companies such as Mashery and Tibco Software

are pushing this data services space with their

platforms to provide an integrated development

environment to rapidly create, orchestrate,

and integrate modular services and business

applications. Other companies such as Apigee are

stepping forward with API management tools that

help make it easier for large enterprises to extend

their reach with mobile apps, create new products

with partners and developers, and more.

The push toward application ecosystemsInsurers should be thinking not only about how

they’ll package apps and services in-house, but

how their apps will interact with their partner

and provider ecosystems. Increasingly, insurance

apps will need to draw on data and services from

multiple sources to provide a customer with a

single-screen solution for risk advice, risk cover and

complementary services.

Allianz’s Ma Sécurité—a free mobile application

providing information to protect people from

major natural and technological risks—leverages

data supplied by the French Ministry of Ecology,

Sustainable Development and Energy, in partnership

with the Department of Prevention to provide a

simple service to customers. Such apps may be

just the beginning. What might happen if insurers

opened the application programming interfaces

(APIs) for their apps to third parties in the ways that

many technology companies already do?

For example, French bank and insurance group

Crédit Agricole has created a financial application

marketplace where third-party developers can

offer mobile and web applications such as personal

finance management tools to Crédit Agricole

customers.xxv Crédit Agricole offers these developers

access to a set of open APIs that enables them to

use the bank’s transactional data to create apps the

bank hasn’t thought of itself. Life and P&C insurers

could benefit from following this example.

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Your 100-day planIn 100 days, begin to develop a comprehensive

strategy that will lay out the foundation for

enterprise app development.

• Appoint a digital champion to coordinate

development of your app strategy across

organizations in your enterprise.

• Start creating a list of enterprise-level apps to

be developed. Work cross-functionally across

business units to prioritize the items on your list.

• Begin architecting consumer-facing apps

to leverage the interfaces and technologies

consumers already use.

The long road ahead As a number of case studies show, insurers are

already getting quick wins by deploying mobile

apps to customers, agents, employees and other

communities. But the end goal of abstraction of

back-end services will be reached through a step-

by-step process, starting with the highest-priority

business needs.

As business users start to embrace technology

and analytics as a way to drive their business

strategies—everything from tools for analyzing

consumer sentiment on social media sites to pilots

of new pricing models—IT must start opening up

the systems, tools, and processes to allow business

users to drive these initiatives forward themselves.

This transformation will allow the enterprise to

move from the paradigm of a backlog of IT requests

from the business to one where IT is empowering

the business to experiment, innovate, and drive its

strategies. Before this state is achieved, insurers

will need to re-examine the skills and organization

structures that must be in place to support the new

arrangement.

Business will be more aware of technology

and its opportunities, and IT will need a better

understanding of the strategic business imperatives

that the technology will drive. Multi-disciplinary

teams made up of user-experience experts, data

scientists, business process analysts/orchestrators

and program manager will become the norm.

More CIOs and IT leaders at insurance companies

will be sitting down with their business colleagues

to discuss how they can help facilitate the new

application development trend. This is a trend that

will be central to catalyzing the transformation of

insurance companies into true digital enterprises.

30

This time next yearIn 365 days, begin the process of implementing the

tools and services to enable the development and

distribution of smaller, more agile and analytics-

enabled applications.

• Begin abstracting your front-end functions from

your back-end services.

• Update your app governance strategy to support

an agile methodology.

• Consider piloting an enterprise app store.

• Based on your pilot results, create a multi-year

road map to deliver your high-priority apps.

• Evaluate the possibility of opening up specific

APIs, and/or pieces of the application platform,

more broadly to the developer community.

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TREND 6

Architecting resilience: “Built to survive failure” must become the mantra of the nonstop insurerIn the digital era, businesses are expected to support the

nonstop demands that their employees and stakeholders place

on business processes, services and systems. As a result,

today’s IT leaders must ensure that their systems—and to

some extent those of their key business partners—are designed

for resilience under failure rather than designed to spec.

32

To take up their roles as tomorrow’s value

aggregators and risk managers, insurers need to

be able to gather and operationalize big data (for

example, from social media, business systems, and

sensors in factories, homes and cars) uninterrupted

and at speed; interact with customers 24 hours a

day through a range of digital channels; and provide

uninterrupted services to their partner ecosystems.

The result is that business continuity and systems

availability matter now more than ever before.

As insurers step up to take a central role in an

ecosystem that provides a range of everyday

services to connected customers, so must they

begin to consider how they will architect their

IT infrastructures to support nonstop business

processes, services and applications. With the cost-

per-minute of data center downtime increasing at

an alarming rate—it climbed 41 percent between

2010 and 2013 according to Ponemon Institute

researchxxvi—insurance carriers must be able to keep

running through any potential disruption, be it a

hurricane, a denial-of-service attack, or a major

systems upgrade.

Insurers are increasingly using digital channels such

as mobile apps and the Web to empower customers

to self-serve, and perform transactions and track

their financial progress. The expectation from

insurers’ stakeholders is that all such services and

platforms will be available all of the time. If they’re

not available when they’re needed, the insurer could

lose credibility and opportunity with its customers,

agents and partners.

Yet addressing the demand for nonstop availability

is far from simple. More business processes are

interconnected and automated right across the

insurance value chain, multiplying the potential

points of failure. More systems are being

integrated—there’s a shift towards multi-channel,

click-to-call customer service and sales operations,

for example—and continuous improvement is

becoming the IT norm.

What’s more, insurers also need to consider the

security and resilience of systems that are used by

third-parties such as agents, claim servicers, data

aggregators, outsourcing service providers and

ecosystem partners. All of this constant change

to increasingly complex systems is introducing

more risk than ever before into the insurer’s IT

environment and business processes.

In addition to traditional dangers such as extreme

weather, civil unrest and other catastrophes,

insurers’ IT infrastructures are also targets for

cyber-criminals who are using increasingly

sophisticated techniques to bring enterprise systems

down. Denial-of-service attacks are becoming more

frequent and more damaging because new tools

are allowing attackers to launch bigger attacks with

fewer resources.

The mindset of resilienceThe more professional and prolific cyber-attacks

become, the greater the role that cyber-security

plays in business continuity. CIOs must use a

business-driven strategy to manage risk across the

enterprise, understanding which assets are critical

and then prioritizing resilience and active defense

measures accordingly.

Resilience does not simply mean putting in place

the right cyber-security structures and deploying

best-of-breed highly available systems. It calls

for a wholesale shift in mindset to the idea of

100 percent uptime. The CIOs who truly get the

concept of resilience have begun transitioning their

organizations and those of their key partners to an

always-on state.

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33

Some examples of the tools and technologies

insurers can integrate into their environments are:

• DevOps tools such as Chef and Puppet to enable

the rapid deployment of new or extended systems

throughout the compute fabric of the enterprise

without disrupting the business.

• Performance monitoring and failure tracing tools

such as Nagios and New Relic, which provide data

center managers with real-time insights so that

they can inspect and troubleshoot their systems,

from source code to hardware components.

• Workload management tools—such as Akka and

Docker—that help to make applications more

portable across heterogeneous infrastructure.

These tools help companies to leverage their

cloud infrastructure investments to build more

distributed and concurrent applications and

services.

• Content delivery networks (from vendors such as

Akamai, CDNetworks, CloudFlare, Cisco, and F5)

are providing businesses with integrated workload

management technologies that allow them to

stay agile all the way to their consumer-facing

activities.

• Software-defined networks (SDNs) enable

organizations to instantly transfer operations to

other online assets, often in automated ways and

without meaningful service interruptions, when

there is a systems failure.

• Sophisticated identity and access management

solutions quickly and flexibly provide and revoke

access to data and applications to end-users.

Knowing that it is neither simple nor cheap to

provide real resilience, they are taking a pragmatic

approach, phasing in resilience over time as business

risk and process economics dictate. And some

are already thinking ahead to the time when their

entire business is digital, cloud-based and always

on. Digital business implicitly increases a company’s

exposure to risk through IT failures.

The time to start architecting for resilience is

right now—not when customers expect it or when

losses in revenue, brand value or trade secrets

have reached painful levels. After the necessary

discussions about risk with the organization’s most

senior executives, IT leaders must begin to map out

the threat models specific to their businesses.

Immediate actionsFor many insurers, a shift towards a more agile and

resilient IT environment is a daunting prospect.

Many still labor with legacy systems built for an

age of batch processing rather than one where

unprecedented volumes of data and transactions

need to be processed in close to real-time. Yet it’s

important to know that many of the tools and

methods to engineer for resilience—to design for an

always-on operation—are available and improving

all the time.

These types of services make IT systems better able

to withstand failure, notifying administrators of

dysfunction, increasing portability, and providing

self-healing capabilities—features that circumvent

the deficiencies of just a few years ago.

34

This time next yearIn 365 days, embark on projects that will reduce

the operational risks of your digital business.

• During the budgeting process, look for security-

and infrastructure-related investments that

maximize business process resilience per dollar

spent.

• Mitigate business downtime risks by aiming

to shift compute loads to public cloud

infrastructure—either during peak times or while

under attack.

• Use results from game-day exercises to create a

prioritized list for operational upgrades.

• Create a security road map to build advanced

detection and external-threat intelligence

capabilities.

Your 100-day plan In 100 days, consider where you can make the

most impact in building a more resilient company.

• Shift conversations about security to

conversations about rapidly identifying and

mitigating business risks.

• Map and prioritize security, operational, and

failure threat models to existing and planned

business operations.

• Develop a strategy to handle elastic business

demand for IT services.

• Create a governance model for auditing and

testing the entire ecosystem of IT system and

process dependencies—both internally and

externally.

ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE

35

CONCLUSION

The insurance industry’s digital opportunity In 15 years, the world has changed at a pace that has left

most traditional insurers behind, whether they’re life or

P&C carriers, and irrespective of whether they focus on

commercial or personal lines of business.

36

Just 10 years ago, Twitter, WhatsApp and Instagram

did not exist. As little as six years ago, most people

used their mobile phones primarily to make phone

calls and send text messages rather than to surf the

Internet and navigate by GPS.

Technologies such as these have blown value chains

apart and reassembled them in new ways that

exclude or disempower the traditional players in

businesses as diverse as media, photography, retail,

and telecommunications. Yet many insurers have

felt insulated from digital disruption by regulation.

The world’s leading carriers, however, are peering

into the future, where they see massive risk and

opportunity from digital trends and technologies

that barely existed a few years ago.

Those that ride the digital wave brought on by

trends such as crowdsourcing, advanced analytics

and visualization, intelligent devices, hyperscale

computing, and modular business apps will be able

to stave off competition from would-be disrupters

and redefine the industry on their own terms.

Forward-looking insurers understand that this

big wave is still in its early stages, but they see

that they could take on new and powerful roles

in the emerging ecosystems. With their strong

balance sheets, their wealth of customer data and

their trusted brands, they are perfectly placed to

interweave digital technologies throughout their

companies to be at the heart of making disruptive

technologies safe realities.

This marks a significant inflection point for the

insurance industry. Here, the leading players will

position themselves as the digitally-enabled giants

of tomorrow, while the laggards risk ceding market

share and revenue to aggressive digital players

ranging from hungry start-ups to entrenched tech

giants such as Google and Facebook.

Now is the time for insurance executives to ask

where their organizations are on their digital

journeys. Though most have adopted technologies

such as digital distribution channels, they have

grafted their digital strategies onto legacy systems,

business processes and business models. Their next

step is to plot the stages of their digital journeys

where they will transform their businesses more

thoroughly.

The pressure applies to both IT and business

executives. The technology imperative is absolute:

it is now time for the CIO’s organization to

decide what role it plays in the emerging digital

business—reinforcing the organization’s technology

backbone while equipping the business side with the

knowledge, understanding, and partnerships with IT

to leverage it.

For the business, it is now incumbent on the leaders

to define their company’s place in the digital world.

They must redefine their relationships with their

customers, partners, and the Internet community

at large; erase organizational silos that restrict

collaboration and data sharing; re-examine the

roles that their enterprise plays in their industry;

and lower the boundaries barring entry to other

industries as potential areas for growth.

The choice for most insurance carriers is this:

transform yourself into a risk manager, advisor

and value aggregator at the center of a digital

ecosystem that delivers high-value services to

customers every day, or be pushed to the periphery

as an interchangeable, commodity service provider

with limited control over your destiny.

ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE

37

Notesi Verizon Buys Hughes Telematics for $612 Million in

Cash, http://www.bloomberg.com/news/2012-06-

01/verizon-to-acquire-hughes-telematics-for-612-

million-in-cash.html, Bloomberg, June 1, 2012

ii Google Closes $3.2 Billion Purchase of Nest,

http://www.cnet.com/news/google-closes-3-2-

billion-purchase-of-nest/, CNET, February 12, 2014

iii How’s My Driving? Gizmos That Track Driving

Habits are Changing the Face of Car Insurance,

http://www.economist.com/news/finance-and-

economics/21572237-gizmos-track-driving-habits-

are-changing-face-car-insurance-hows-my,

The Economist, February 23, 2013.

iv How Progressive Uses Telematics and Analytics

to Price Car Insurance, http://www.cio.com/

article/736686/How_Progressive_Uses_Telematics_

and_Analytics_to_Price_Car_Insurance, CIO,

July 26, 2013. Also Progressive Snapshot Reaches

10 Billion Mile Mark, http://www.businesswire.com/

news/home/20140320005992/en/Progressive-

Snapshot-Reaches-10-Billion-Mile-Mark#.U05d3_

mSxu4, March 20, 2014.

v Policybazaar Launches New Model for Vehicle

Insurance Premium, http://www.business-

standard.com/article/companies/policybazaar-

launches-new-model-for-vehicle-insurance-

premium-113041500214_1.html, Business Standard,

April 15, 2013.

vi 90% of Drivers Would Consider an Autonomous

Car if it Cut Insurance Rates,

http://www.computerworld.com/s/

article/9243858/90_of_drivers_would_consider_

an_autonomous_car_if_it_cut_insurance_rates,

Computer World, November 6, 2013.

vii Autonomous Cars & the Death of Auto Insurance,

http://www.thecarconnection.com/news/1083266_

autonomous-cars-the-death-of-auto-insurance,

The Car Connection, April 1, 2013.

viii A Scenario: The End of Auto Insurance,

http://www.celent.com/reports/scenario-end-auto-

insurance?WT.qs_osrc=nas-122850910, Celent,

May 8, 2012.

ix Will Drone Cargo Ships Sail the Seven Seas,

http://www.businessweek.com/articles/2014-02-27/

rolls-royces-plans-for-drone-cargo-ships-opposed-

by-industry, Bloomberg BusinessWeek, February 27,

2014.

x First Vehicle-Monitoring Devices, Now This,

http://www.insure.com/home-insurance/usaa-

house-monitoring-device.html, Insure.com,

December 10 2012.

xi North America Most Affected by Increase in

Weather-Related Natural Catastrophes,

http://www.munichre.com/en/media-relations/

publications/press-releases/2012/2012-10-17-press-

release/index.html, Munich Re, October 17, 2012.

xii The Climate Corporation, http://www.climate.com/

xiii Building a Fitter Business with Wearable

Technology, http://www.forrester.com/Building+

A+Fitter+Business+With+Wearable+Technology/

fulltext/-/E-RES108942, Forrester, January 6, 2014.

xiv How Allstate Crowdsourced a Vexing Data

Problem, http://www.insurancenetworking.com/

blogs/allstate-crowdsourcing-kaggle-30106-1.html,

Insurance Networking News, March 22, 2012.

xv UnitedHealth Group Innovation Pavilion,

https://www.innocentive.com/pavilion/unitedhealth-

group

38

xvi Accenture 2013 Consumer-Driven Innovation

Survey: Playing to Win, http://www.accenture.com/

us-en/Pages/insight-consumer-driven-innovation-

survey-2013.aspx, Accenture, January, 2014.

xvii The Promise of Better Data Has MetLife Investing

$300M in New Tech, http://gigaom.com/2013/05/07/

with-300m-earmarked-for-tech-innovation-

metlife-wants-to-remake-insurance/, Gigaom,

May 7, 2013.

xviii Worldwide Internet of Things (IoT) 2013–2020

Forecast: Billions of Things, Trillions of Dollars,

http://www.idc.com/getdoc.jsp?containerId=243661,

IDC, Doc #243661, October 2013.

xix Microsoft Now Has One Million Servers,

http://www.extremetech.com/extreme/161772-

microsoft-now-has-one-million-servers-less-than-

google-but-more-than-amazon-says-ballmer,

ExtremeTech, July 19, 2013.

xx An Allstate App Feature Lets Accident Victims

Settle Smaller Claims Digitally, http://articles.

chicagotribune.com/2013-09-24/classified/ct-biz-

0924-quick-claims-20130924_1_app-repair-shop-

policyholders, Chicago Tribune, September 24, 2013.

xxi Taikang Life Insurance Industry Claims

Devaluation Micro-Channel Service Platform,

http://www.ccstock.cn/stock/insurance/2013-06-27/

A1233735.html, CCStock.cn, June, 2013.

xxii Mobile Apps and Digitalization Dominate Top

Insurers’ IT Initiatives, http://www.gartner.com/

document/2664826/meter/charge, Gartner,

February 11, 2014.

xxiii Online Insurance in Japan: Seeking Avenues for

Greater Growth, http://www.celent.com/reports/

online-insurance-japan-seeking-avenues-greater-

growth, Celent, October 18, 2013.

xxiv High Performers in IT: Defined by Digital,

http://www.accenture.com/Microsites/high-

performance-it/Documents/media/Accenture-High-

Performance-IT-Research.pdf, Accenture, 2013.

xxv Open API for Bank Apps: Can Credit Agricole’s

Model Work Here?, http://www.americanbanker.

com/magazine/123_8/open-api-for-bank-apps-

can-credit-agricoles-model-work-1060535-1.html,

American Banker, July 29 2013.

xxvi Study: Data Center Downtime Costs $7,900

Per Minute, http://www.datacenterknowledge.

com/archives/2013/12/03/study-cost-data-

center-downtime-rising/, Data Center Knowledge,

December 3, 2013.

About the Technology Vision study for 2014Every year, the Technology Vision team at

Accenture Technology Labs, with the Accenture

Research organization, pinpoints the emerging IT

developments that will have the greatest impact

on companies, government agencies, and other

organizations in the years ahead.

This vision is distilled from Accenture’s extensive

research over the course of the previous year, along

with input from technology experts and analysts.

The conclusions are then tested for relevance

within insurance by consulting with clients, industry

analysts and our own subject-matter experts.

ACCENTURE TECHNOLOGY V IS ION 2014 FOR INSURANCE

39

Copyright © 2014 Accenture All rights reserved.

Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

About AccentureAccenture is a global management consulting,

technology services and outsourcing company, with

approximately 289,000 people serving clients in

more than 120 countries. Combining unparalleled

experience, comprehensive capabilities across all

industries and business functions, and extensive

research on the world’s most successful companies,

Accenture collaborates with clients to help

them become high-performance businesses and

governments. The company generated net revenues

of US$28.6 billion for the fiscal year ended

Aug. 31, 2013. Its home page is www.accenture.com.

For more informationJohn Cusano Senior Managing Director, Global Insurance Industry, Accenture john.m.cusano@accenture.com

Mark Halverson Managing Director, Distribution Services Accenture Financial Services mark.a.halverson@accenture.com

Edwin Van der Ouderaa EALA Digital Go-to-Market Lead Accenture Financial Services edwin.vanderouderaa@accenture.com

Andrew Starrs Group Technology Officer Accenture Financial Services andrew.starrs@accenture.com

www.accenture.com/insurance www.accenture.com/technologyvision

14-2263U