Modern insurers are increasingly leveraging data from IoT sensors, applying powerful AI algorithms to deliver just-in-time risk warnings through true omnichannel interactions on an unprecedented scale. As this technology reduces claims, which in turn reduces premiums, the size of the traditional risk mitigation market will decrease exponentially. If traditional insurers don’t replace this lost revenue stream with risk management fees and services, they will wither and die.
The traditional insurance business model is about to undergo a radical transformation. Companies are starting to take digital transformation seriously, and as part of this they are beginning to leverage new technologies including cloud, automation, analytics, artificial intelligence and mobile to provide significantly greater risk management as part of the overall insurance proposition. Consequently, the new “As-a-Service” model has emerged, and yet, the insurance sector hasn’t jumped on this bandwagon in a mainstream way. Some argue that the industry is being foolhardy in not taking note of the negative experiences of other industries’ shifts from product to technology-based service business models.