The insurance industry will be a very different place in 2025 due to innovations such as telematics and the potential intrusion of e-commerce giants such as Google and Amazon, according to a global study by the Economist Intelligence Unit (EIU).

With emerging technologies already accelerating innovation in products, services and business models, 60% of insurers expect “significant to massive change” in the industry over the next 10 years, the new report shows.

However, business leaders are uncertain of the forms that change may take.

About 32% of 338 general and life insurance executives surveyed in June believe e-commerce operators are the main external threat to their business, followed by online banks (31%), aggregators (14%) and large retailers (11%).

In the US, retailer Walmart has entered motor, small business and health insurance, and Google last year launched Google Advisor, which compares motor insurers.

Google has also acquired UK insurance aggregator BeatThatQuote and US group Nest Labs, which makes “smart home” devices such as remote-control thermostats – technology that may have implications for underwriting, according to the EIU.

Non-insurance entities have started to interact with insurance consumers, the report says.

Snupps, a UK developer of home inventory software, offers a mobile app that helps ensure proper contents insurance payouts. And US start-up Sureify has developed a website that educates consumers about their life insurance needs using games and other interactive approaches.

The report – The way forward: Insurance in an age of customer intimacy and internet of things – flags opportunities arising from recent innovations in Big Data and other technologies.

“Despite having been one of the first industries to use data processing on a large scale, insurers have acquired a reputation of lagging technologically over the past decades,” it says.

However, they are already using predictive modelling and are now turning to cloud computing solutions and consumer-related technology.

The report says the demands of digital commerce are changing, and insurers must rationalise their data so it can be more easily used for transaction and service purposes and to evaluate, price and underwrite risks more accurately.

86% of insurers now make more use of data or plan to in the next five years, while 82% have or will obtain more external data from third-party sources such as governments and suppliers.

51% of insurers say improved customer targeting is the main benefit of data and analytics investments, while 46% cite more accurate pricing. About 80% plan to use data to improve predictive analytics and 76% will make relevant data accessible to more people in the company.

At least 30% of insurers expect disruption in distribution, service or products.

46% believe their companies are well prepared for change, but only one-quarter see the industry as well prepared.

The report says insurers have had to rethink not only the value of data, but also the concept of privacy.

Innovations such as telematics – remote transmission of data over telecoms devices – have already enabled premium discounts in motor insurance.

Life insurers are also adapting data. The US-based Principal Financial Group has created an automated underwriting process for retail variable and universal life products, cutting a weeks-long process down to 48 hours, with no physical examinations or blood work.

The insurer believes it will eventually underwrite up to 40% of its business without human intervention.

Insurers are split on whether volumes of business carried out with agents will rise or fall.

Direct is the favoured distribution strategy (47%), followed by agent support (43%) and partnerships with third-party distributors (37%).

Online service has become an important way for insurers to woo independent agents and other distributors, the report says.

Wearable technologies and machine-to-machine or internet capabilities are opening new avenues for data exchange that support underwriting and loss control.

US-based health services company Cigna has joined with Samsung to develop a platform for users to track individuals’ health statistics such as blood pressure, glucose levels and weight, plus their exercise routines.

“While insurers may have fallen behind some other industries in the use of data and analytics, recent developments and innovations in this field point to a promising future,” the report says.