UK: Insurance Disrupted: General Insurance In A Connected World

Last Updated: 28 July 2015
Article by Rich Hurley and Peter Evans

Most Read Contributor in UK, August 2017

Welcome to the first in a five-part blog series on digital disruption in general insurance (GI). The series accompanies our recently published report, Insurance disrupted

This post outlines our view on digital disruption in GI as a theme; subsequent posts will explore how specific digital technologies could disrupt GI in more detail. 

Why explore digital disruption in GI now? 

GI executives need a clear view on digital disruption.

They understand the power of digital technology to disrupt, or force change upon, their industry. The UK has been at the forefront of one of the most obvious and dramatic trends in digital disruption: in the past fifteen years, price comparison websites have risen to become the most widely used form of intermediary, worth Ł1 billion in fees and commission.

Yet it is difficult to discern which technologies will be the most important disrupters in future. There are many potential disrupters. A recent report identified no less than 41 applications of digital technology that GI executives ought to consider. There is a deafening chorus of hype around digital, with weighty reports on the subject released regularly. 

Key questions

With this in mind, we set out to answer two key questions:

  1. Which digital technologies have the greatest potential to disrupt GI over the next ten years?
  2. To what extent are digital technologies a threat to incumbent insurers?

To focus the research, we de-scoped from our analysis digital technologies that are likely to disrupt many industries in addition to GI, as well as disrupters that lack an obvious technology angle, such as convergence capital. 

Nine killer applications

In our view, there are nine applications of digital technology in GI - which we call the nine killer applications - with the greatest disruptive potential. 

We came to this conclusion by looking for applications that have the following potential:

  1. High customer demand
  2. High profit impact
  3. Lack of regulatory barriers
  4. Technologically possible today

We tested technologies against the first criterion via a proprietary consumer survey. 

Opportunity, threat, or both? 

The research yielded many exciting conclusions, which bring the debate forward. 

Most importantly, we think that digital technology presents profound opportunities, and not just threats, to incumbent insurers. Our view contrasts with the widely held belief that digital technology is overwhelmingly a threat to incumbents. 

Our research on telematics, which is the subject of the next blog, is a clear example of the opportunities for incumbents. Incumbents are better positioned than new entrants to capture the emerging opportunities of telematics, which lie in risk reduction and information services, and not premium discounts. Incumbents with telematics offerings have a critical head start over new entrants in data and insight. 

We hope you find the insights in Insurance disrupted useful and thought-provoking. Your feedback is very welcome.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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