Digitization has moved far beyond machine-to-machine process automation – and the trend will have far-reaching consequences for the insurance sector.

We’re witnessing a gradual convergence of technologies, processes, data, assets and people across an integrated ecosystem. Sophisticated web interplay between data and capital now underpins everything from agriculture, manufacturing and financial services to health and transport.

For example, an estimated 104 million new cars are expected to have some form of connectivity by 2025 as telematics grows, while Google and Novartis are jointly working on a smart contact lens that monitors blood-sugar levels and corrects vision.

This trend is forcing firms to either evolve or disrupt their business models in order to survive – and insurance is no exception. The sector is experiencing an evolution in products, services and infrastructure in response to the connected world. Progress in the insurance digital space will be driven by successful innovation, including the adoption of disruptive technologies such as mobile, analytics, big data and payment platforms.

The initial drivers for insurance innovation were related to cost reduction and process efficiencies. These have now been superseded by coveted client-centric principles such as customer experience and service quality, particularly in claims. As digitization continues its pervasive path, the need for customer intimacy, transparency and security of personal data is becoming essential to an insurer’s infrastructure. Without these cornerstones in place to build a customer-centric organization, the value of businesses can easily be eroded as quickly as customers can be attracted.

Fast-emerging disruptive technologies such as blockchain and next-generation iterations such as Ethereum are evolving rapidly and underpinning many aspects of innovation. There are obvious benefits to driving the adoption of these global technologies. Blockchain increasingly offers greater levels of autonomy and attribution. This includes the growing use of mobile-to-mobile transactions and swifter, secure payment models, client data provenance, registers of assets, fraud detection and reduced risk of duplication or exposure management.

While there are obvious rewards associated with innovation architecture, there are also challenges for insurers to consider:

Most important of all, the integrity, controls and transparency of insurers’ business processes, reinforced by recent trends in regulation, must be geared towards protecting the customer experience. Unless insurers are prepared to innovate, either customers or regulators will force them to change.

Download the Blockchain technology as a platform for digitization: Implications for the insurance industry report here.