Insurance Industry Expects Wearable Technologies to Impact Entire Business Model

By Laura Stotler
TMCnet Contributing Editor

There has been a massive amount of hype across the board for wearable technologies, with the Apple Watch and Android (News - Alert) Wear battling for market dominance. While users hash out the pros and cons of the hottest watch models, the insurance industry is banking on the impact of the wearable technology trend.

The new Technology Vision report from Accenture (News - Alert) reveals that nearly two-thirds of insurers expect wearable technologies to significantly impact their industry. Wearables and similar devices are expected to track and deliver a variety of variables that will ultimately help insurance companies change their business models and better provide outcome-based services for customers.

Nearly one-third of the insurers surveyed are already using wearables to engage customers, as well as employees and partners. And half of those queried said they are already seeing positive investment returns from personalized technologies. Overall, a majority of those surveyed said wearable technologies will be broadly adopted by the insurance industry during the next two years.

“While insurers have traditionally based their underwriting and pricing processes on a limited view of certain customer variables, emerging technologies such as wearables and other connected devices can help insurers break from their traditional business models and provide outcome-based services for their customers,” said John Cusano, senior managing director of Accenture’s global Insurance practice. “For instance, one leading insurer recently announced that it will provide new policyholders with a free fitness band to track their health progress – and then reward their healthy living with a reduction in life insurance premiums.”

As with all types of big data collection, the ability to collect and mine data presents a technology challenge to insurers. More companies are looking into software intelligence within the context of gleaning value from wearable technologies and these types of solutions are becoming a much more integral part of their business plans.

“Companies are starting to recognize the value provided by advances in language processing and speech recognition, which are making it easier for people to interact naturally with technology and machines,” said Thomas Meyer, managing director of Accenture’s Insurance practice in Europe, Africa and Latin America. “The next-generation insurance company will benefit from human and technology collaboration, with workers leveraging new technologies such as wearables to augment their abilities and help them make better decisions.”

The Accenture report also found that an increasing number of insurance companies are getting in on technology and software intelligence at the ground level, taking part in open API initiatives and molding solution platforms to meet their very specific needs. And 75 percent of those surveyed believe the next generation of platforms will be shaped by insurance companies instead of technology companies. Half of those queried plan to partner with major digital technology and cloud platform companies, while nearly two-thirds plan to engage with partners within the insurance industry on platform development.