In a digital world, it is critical to the business success of insurers to have the ability to predict what will put pressure on their companies' current business models in the future, but also make new things possible in the market. Accenture calls this "predictable disruption" in this year's Technology Vision for Insurance. We point out that insurers need to understand that they are part of a larger ecosystem in which they should actively keep abreast of developments and determine what kind of role they want to play. Insurance companies must also actively use the ecosystem to predict and counter any threats, as well as harness new opportunities in the market.
Ecosystems form around every asset, life, or activity, which insurers today work to insure. Houses are turning into "smart homes," where everything from the refrigerator to water pipes have sensors and can communicate with the occupants of the house if the refrigerator is empty or in case of water damage, for example. Cars can access online data and, like the Tesla, ever more often download the latest software updates for their motors, or communicate with home like the Mercedes so that the user's house is heated up by the time they get back from work. Entire cities are emerging as "smart cities" with the ability to harness their energy consumption in the most efficient way possible based on data on their inhabitants and road congestion, for example, while our lives and health become ever more digital and predictable as we are able to map out and understand our genes.
The key for insurers is to understand the circumstances of the insured person and how new players and new technology help redefine risks and bring about new services. We see how companies in the United States have changed travel insurance from a clean payment of compensation to monitoring flights and automatic rebooking, and recently the Italian luggage brand Carpisa suitcases has collaborated with an insurance company to launch a suitcase with "built-in" insurance. The next step could be to begin collaborating with Tile, for example, which supplies technology to track missing items and would be able to give insurers information on where the item goes and how often it moves, which also opens up for entirely new possibilities.
Another example is dental insurance, last year with Beam dental launching dental insurance in conjunction with an electric toothbrush and an app that shares data with insurance companies so that they can advise their customers on better dental care and thereby reduce the cost to repair damaged teeth. The next step may be to have sensors in toothbrushes analyze the user's saliva and give access to information on the customer's health, thus bringing about new insurance products and services.
Gazing into their crystal ball will therefore be the insurer's way of constantly challenging themselves, asking questions and searching for answers that can protect their existing business while making new things possible. For example, what does it say that 98% of all new cars in 2020 (compared to 35% in 2016) and 30% of 180 million homes in 2017 are expected to be connected to the Internet of Things, not to mention that self-driving cars will lead to lower risk while also introducing new risks for the underlying technology and "cyber security." In addition to this, there are entirely new business models emerging from the sharing economy that transfer assets to services. One curiosity that can be cited is how a company in China recently 3D printed 10 single-family houses from construction waste in just one day, which ought to get some insurers up out of their chairs considering how traditional building insurance works.
As a leader in
the insurance industry, you should therefore ensure that your employees have
the knowledge they need to understand the new reality of technology and our
surroundings, and not least the readiness to change when it comes to adapting
and getting one step ahead of technological development. So even if we cannot
predict 100% of the future, by opening our eyes and ears, and not least our
minds, we can still come a long way.