Shifting gears: Insurers adjust for connected-car ecosystems
As the number of applications grows, a strong ecosystem is forming around the connected car, involving a range of participants—among them automakers, insurance companies, telecommunications firms, sensor and chip manufacturers, and digital-platform giants like Amazon and Uber, as well as academic institutions and standards-making bodies. The rise of this ecosystem is changing the competitive landscape for all participants, especially for companies in the insurance industry. Insurers face digital disruption in a number of areas. Their analytics capabilities, for instance, may be displaced by predictive-modeling or machine-learning technologies. And their traditional data sets, which contain risk profiles based on claims history, may be losing value given the growing availability of real-time data streaming from connected cars.
How must these businesses adapt their technology infrastructures, architectures, and strategies for a world of connected vehicles—and what are the implications of those changes for CIOs and internal IT departments? Our study of global insurance companies suggests that some are unlocking new sources of profit from the connected-car ecosystem. They are acknowledging the network effects that are taking hold in their industry and, on their own and in partnership with other ecosystem participants, they are investing in new technologies and IT-management strategies—specifically, incorporating mobile sensors and analytics into their products and services, enlarging the customer data pool, digitizing customer interfaces, and building up internal digital know-how and capabilities. As a result, they are finding new ways to deliver innovative products and services and to enhance customers’ experiences, and they are forging a path for long-term growth. In this article, we consider the technology investments and IT-management approaches that are most critical for insurers to seize the opportunities presented by connected cars.