40% revenue loss in next 5 years: Accenture

Management consulting company Accenture has cautioned the industry to be prepared for the scale of potential digital disruption and has stated that some carriers could lose up to 40 percent of their traditional revenue within the next five years.

The research indicated that, whilst re/insurance has so far been one of the business sectors least affected by digital disruption, it ranks in the top quartile of sectors likely to be disrupted in the next few years.

Although the threat of disruption has prompted re/insurers to invest heavily in new technology, this spending has been largely reactive, with companies competing to stay ahead of InsurTech start-ups and big digital service providers.

However, Accenture suggests that it’s not the threat of new players and technologies themselves that will most fundamentally disrupt the re/insurance marketplace, but rather the way that new digital companies are changing consumer expectations in regard to choice and quality of service.

Accenture points to the business models of highly successful digital disruptors like Google, Apple, Facebook, and Amazon (GAFA) as a guide for what consumers now expect from a modern service provider, and as an example that re/insurers should attempt to replicate.

Accenture maintained that if companies react quickly to these shifting consumer landscapes, they may gain a competitive edge and preserve many of their traditional revenue streams.

Additionally, early adopters will be able to exploit new business opportunities that may emerge far outside of the traditional re/insurance market.