The insurance industry has been characterised as traditionalist and conservative – an industry that is slow to change with limited consumer reach. Technology innovations can thus be regarded as the new frontier for the insurance industry as these new developments are seen as a move-away from the historical and typical business models used by insurers to conduct their business.Verusha Moodley and Byron O’Connor from Cliffe Dekker Hofmeyr explore this idea.According to “Fintech Developments in the Insurance Industry” there are various drivers that are encouraging this change. The internet of things, which relates to the interconnectivity of devices that allows for the collection and exchange of data, has allowed for more information to be collected on consumers. This, in turn, allows insurers to improve their forecast on incumbent risks.As explained in “Fintech Developments in the Insurance Industry”, technology can expand consumer interaction, and thus improve customer satisfaction. The use of new technologies can also improve pricing, risk selection and naturally, the overall efficiency of insurers’ operations. There are a variety of emerging technologies that have the potential to transform the insurance industry and the nature of risks insured. In particular, data technology can provide new ways to capture and analyse data needed by an insurer. Extracting data specific to an insured can allow insurers to offer more personalised premiums and expand insurability. Data technology can also improve transparency and mitigate or decrease underwriting risks. By obtaining real-time and personalised information on each insured customer, insurers can measure risk more accurately, and thereby provide more customer specific policies. Innovative technology being introduced into the insurance industry includes:• Smart homes and property insurance – Home monitoring systems can provide insurers with data on and control over household risks. For example, ADT Pulse allows homeowners to remotely monitor their homes, remotely arm and disarm their homes, as well as to monitor water and flood sensors through their tablets or smartphones. The data received can help insurers better manage risk and mitigate losses by providing important information with the ultimate aim of avoiding the occurrence of an insurable event. This, in turn, can result in fewer claims and improved customer satisfaction. “Smart” homes can thereby reduce the severity and frequency of household and property insurance claims. • Wearables, and health and life insurance – Fitbit is a wireless-enabled wearable technology device that measures data such as the number of steps walked, heart rate, quality of sleep, and other personal metrics involved in fitness. The use of wearable biometric sensors, such as Fitbits, can provide insurers with information on the health of an insured. With use of wearable sensors, like the Fitbit, insurers can receive data on an insured’s exercise habits, heart rate and blood pressure. This data can assist the insurer in its assessment and underwriting of a health risk.• Telematics and car insuranceDevices connected to a vehicle can transmit data for the purpose of assessing an insured’s risk profile. The information received can assist insurers to make informed underwriting decisions and provide appropriate policies in turn.While new technologies can improve insurers’ business operations, these changes come with new challenges. As a result of the increased innovation within the industry, insurers will have access to more sensitive information about their customers which will increase operational risks. Insurers’ systems used to store sensitive information will therefore need to be resilient in the face of continued data breaches. Computer programming and data engineering will become an essential component as insurers transition into an increasingly digital and data-based industry. This, in turn, will require insurers to develop adequate technical resources, knowledge and skills needed when using new technologies in their business operations. Technological advancements in the insurance industry will ultimately lead to changes in the regulatory landscape. As a result, insurers may need to adjust their business models and policies to cater for any additional requirements imposed by legislation. Emerging technologies and innovations are beginning to transform the insurance industry, and for the better. New technologies are creating novel ways to assess, manage and price risk, reduce costs and ultimately expand insurability. In essence these innovations will reinvent the insurance industry.Going forward, insurers who are unwilling to introduce new technologies into their business will likely face low growth and declining profits as a result of their inability to compete with other more innovative players in the market.