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Author's profile photo Joseph Pacor

The Next 10 Years: Reshaping the Global Insurance Sector

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Over the last decade, the foundation on which the insurance industry is built has started to shift – and companies across the industry have started to take notice. In a business that has stayed essentially the same for centuries, even small changes can seem monumental. But as outlined in a recent report from SAP and Ovum, “Technology Transformation in the Global Insurance Industry”, technology is rapidly changing our business, so much so that in 10 years the insurance industry will be unrecognizable. Technology will shift not only how we do business, but also the very model on which we operate. And while some in our industry may succumb to these changes, companies that are willing to engage with new technologies will be able to exploit the unique opportunities they present.

In the paper, Ovum identifies three major technology areas that it believes will have the greatest impact on the industry over the next 10 years. So let’s take a look at these three areas – digital transformation, cloud, and the Internet of Things (IoT) – and discuss how they have the potential to change the insurance business model.

Digital transformation

The insurance industry has already been changed by the digital transformation, with companies replacing face-to-face interactions with online and mobile ones, including the wide adoption of company mobile apps. Where digital transformation really has the potential to change the industry is, interestingly enough, in the workforce. Over the next few years, the amount of data that companies need to analyze will continue to explode and the processes will need to be automated. As those daily employee tasks are automated, Ovum believes that those employees will be able to “Focus on high-complexity tasks such as fraud detection, complex claims handling, and customer servicing.” This will improve a company’s ability to interact with its customers in real time, and offer “insurance-as-a-service,” a concept we will explore later.


Ovum recently discovered that “Nearly 80% of insurance CIOs expect cloud technology to significantly change or transform both the insurance industry and their organization in less than five years.” Cloud technology will most likely change the way carriers consume and source IT, but that won’t change the industry. The opportunity that cloud technology presents is the ability to create a flexible infrastructure that can adjust on-demand in response to changes in the market. Agility enabled by cloud technology will be the key to future success.

The Internet of Things

The potential of the IoT for insurance is greater than almost any other technology available today. Using IoT devices to monitor items being insured and the environment they are in will fundamentally change the nature of insurance products and services. Companies will be able to more accurately assess, mitigate, or even eliminate risk thanks to IoT sensors and monitoring. Imagine a car that can report on driver behavior and then send feedback to the user in real time, or even override the driver to avoid low-speed collisions. In addition to managing risk, these innovations also have the potential to bring in new customers and strengthen existing customer relationships.

The result: Insurance-as-a-service

Individually, these trends in technology are sure to transform the insurance industry. But even more exciting is the potential for change that all three combined present. Ovum outlines what it believes is one of the most far-reaching impacts of the technologies – the idea of “insurance-as-a-service.” The report defines insurance-as-a-service as “the concept of providing ongoing indemnity across a range of risk types (such as property, auto, travel, etc.), with the premiums charged reflecting the actual usage of those insurance elements.” Insurance-as-a-service brings the company into the day-to-day use of insurance, becoming an active and valued service provider for its customers.

When facing the future of the insurance industry, it’s important not to get wrapped up in a single concept or trend. With the industry changing rapidly, overall effects on business models and customers are what really matter. Learn more about predicted changes, and how your company can work to stay ahead, in the report from SAP and Ovum.

And for more information, please visit SAP for Insurance.

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