What are digital twins and why ought to insurers care?

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The insurance industry has been based on data since its inception. Meanwhile, several other industries have proven the need for a profound change in data usage – a change that will have profound implications for the future of North American insurers and their customers.

In the past, insurers used insights from historical data to make their business decisions. However, they now have the opportunity to understand their customers and their business in a whole new way because of:

  • The arrival of cloud computing.
  • An increase in additional data sets thanks to the instrumentation of assets.
  • Real-time or streaming data and analysis.

Our latest technology vision for insurance underscores the importance of data to insurers and suggests that a major trend is the implementation of smart digital twins and the transition to a mirrored world.

What are digital twins?

Digital twins are a virtual replica or mirror of a physical system. In order to visualize and contextualize data from physical and virtual assets, they combine physical processes and digital capabilities and enable the exchange of information with ecosystem partners. In the early days, digital twin models were limited in size and complexity, but their scope is now growing rapidly with the addition of AI and automation. They also increasingly require the use of sophisticated analytics.

Technology Vision for Insurance 2021 – We outline five emerging technology trends that will affect the insurance industry in 2021 and beyond.

LEARN MORE

How are digital twins used in other industries?

Outside of insurance, digital twins are linked to create living models of entire factories, product life cycles, supply chains, ports and cities. Companies use them to understand supply chain predictability, occupational safety, maintenance and repair costs, and to serve as a risk-free playground for innovation. For example, Unilever is working with Microsoft to develop smart twins of its factories to test potential operational changes and improve production efficiency and flexibility.

With the help of AI, companies can react to this data. You can:

  • React dynamically to real-time information
  • Ask “what-if” questions about possible future scenarios
  • Design and test new products in the virtual world long before they are physically built

When we surveyed executives, 65% said they expect their company’s investments in smart digital twins to increase over the next three years. I am not suprised. I agree with my colleagues that intelligent digital twins are fundamentally changing the way companies work, collaborate and innovate. And I believe that insurers who 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 explore why insurers have been slower to adopt digital twins than their counterparts in other industries, four areas where you can use digital twins to your advantage, and how you can use smart digital twins.

In the meantime, if you want to learn more about the technology trends that are likely to affect insurers, check out our report: Technology Vision for Insurance 2021

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Disclaimer: This content is provided for general informational purposes and is not intended to be used in lieu of advice from our professional advisors.

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