The insurance industry has been built on data since its inception. Meanwhile, several other industry sectors have proven that there’s a need for a fundamental shift in how data is used—a shift that’s going to have widespread implications for the future of North American insurers and their customers.
In the past insurers used insights based on historical data to inform their business decisions. However, they now have opportunities to understand their customers and their business in a whole new way due to:
- The arrival of cloud computing.
- A proliferation of additional datasets thanks to instrumentation of assets.
- Real-time or streaming data and analytics.
Our latest Technology Vision for Insurance highlights the importance of data for insurers and suggests that a key trend is the implementation of intelligent digital twins and a move toward a Mirrored World.
What are digital twins?
Digital twins are a virtual replication or mirror of a physical system. As a way to visualize and contextualize data from physical and virtual assets, they bridge physical operations and digital capabilities, and enable the sharing of information with ecosystem partners. In the early days, digital twin models were confined in size and complexity, but the scale of them is growing rapidly now with the addition of AI and automation. They’re also increasingly requiring the use of sophisticated analytics.
How are digital twins used in other industries?
Outside of the insurance realm, digital twins are being linked together to create living models of whole factories, product lifecycles, supply chains, ports and cities. Companies are using them to understand supply chain predictability, worker safety, maintenance and repair costs, and as a risk-free playground for innovation. For example, Unilever is working with Microsoft to develop intelligent twins of its factories so it can test potential operational changes and improve production efficiency and flexibility.
With the assistance of AI, companies can act on that data. They can:
- Respond dynamically to real-time information
- Ask “what-if” questions about possible future scenarios
- Design and test new products in the virtual world long before ever constructing them physically
When we questioned executives, 65% said that they expect their organization’s investment in intelligent digital twins to increase over the next three years. I’m not surprised. I agree with my colleagues that intelligent digital twins are driving a step-change in how businesses operate, how they collaborate and how they innovate. And I believe insurers that choose not to take advantage of the many benefits of digital twins will struggle to participate in the markets and ecosystems of the future.
In the following posts, I’ll look at why insurers have been slower than their peers in other industries to adopt digital twins, four areas where you could leverage digital twins to your advantage and how you can put intelligent digital twins to work.
In the meantime, if you’d like to learn more about the technology trends expected to impact insurers, read our report: Technology Vision for Insurance 2021