Insurance Re-Boot 2 · Global Futures & Foresight With change comes risk • Root causes of...

Global Futures& Foresight

David Smith

Global Futures and Foresight

Copyright © Global Futures and Foresight, 2015

Insurance Re-Boot 2.0


With change comes risk

• Root causes of declines in

public companies’ value:

• 60% strategic risks.

• 30% operational risks.

• 10% financial risks.

Source: Society of Actuaries (2013) : Enterprise Risk Management: Looking Forward

"the assumptions on which the

organization has been built and

is being run no longer fit reality.“

Peter Drucker


Data Processing

"I have travelled the length

and breadth of this country

and talked with the best

people, and I can assure you

that data processing is a fad

that won't last out the year."

The editor in charge of business

books for Prentice Hall, 1957.

http://www.pcworld.com/resource/article/0,aid,125038,pg,1,RSS,RSS,00.asp

http://www.pcworld.com/resource/article/0,aid,125038,pg,1,RSS,RSS,00.asp


... and the telephone

“The 'telephone' has too

many shortcomings to be

seriously considered as a

means of communication.

The device is inherently

of no value to us.”

Western Union internal memo, 1876.

Over 1.5 billion telephone lines

Over 7 billion mobiles


Connectedness

• The IoT takes data collection

and predictive analytics to

new levels of granularity.

• Providing real-time

information about the status

of people, property, and

equipment.

• Via web-connected sensors.

http://www.propertycasualty360.com/2014/12/15/internet-of-things-has-upside-potential-downside-r

http://www.propertycasualty360.com/2014/12/15/internet-of-things-has-upside-potential-downside-r


Internet of everythingBy 2020

• One trillion sensors embedded in humans and machines.

• We will each own 50 internet connected devices.

http://www.industrytap.com/the-hybird-age/3651

http://www.industrytap.com/the-hybird-age/3651


IoT impact

• Associated IoT services

worth $70 billion today. Deloitte

• Industrial 'Internet of

Things' to boost UK

economy by $531billion

by 2030.

http://www.telegraph.co.uk/finance/newsbysector/industry/11358628/Industrial-Internet-of-Things-to-boost-UK-economy-by-531bn-by-2030.htmlhttp://www2.deloitte.com/global/en/pages/technology-media-and-telecommunications/articles/tmt-predictions.html

http://www.net-security.org/images/articles/iot.jpg

http://www2.deloitte.com/global/en/pages/technology-media-and-telecommunications/articles/tmt-predictions.html


Telematics goes mainstream

• Number of connected

cars will grow more

than six fold;

– 152 million in 2020

– 23 million in 2013 IHS Automotive

http://blogs.sap.com/innovation/industries/internet-of-things-a-bane-or-boon-for-insurance-01562394

http://www.thebigdatainsightgroup.com/site/sites/default/files/telematics.jpg

http://blogs.sap.com/innovation/industries/internet-of-things-a-bane-or-boon-for-insurance-01562394


Blurred boundaries

• Telematics and the

usage-based insurance

(UBI) model, will…

‘…act as bridges toward

an inevitable future’

• In which non-traditional

companies could enter

and disrupt the risk mgmt

business. Aite

http://www.canadianunderwriter.ca/news/telematics-a-bridge-to-an-inevitable-future-for-the-insurance-industry-report-predicts/1003211212/?&er=NA

https://carlosandressanchez.files.wordpress.com/2011/04/comingout.jpg

http://www.canadianunderwriter.ca/news/telematics-a-bridge-to-an-inevitable-future-for-the-insurance-industry-report-predicts/1003211212/?&er=NA


Will we still need some insurance?

• Telematics.

• Collision avoidance.

• Automated traffic law

enforcement.

• Self driving cars.

• Wearables.

• Genome mapping.

• Together these technologies have the potential to:

– Reduce U.S. auto liability premium from 25% of total premium to only 10%.

– Reduce auto physical damage from 14% to 3% by 2022.

http://www.insurancetech.com/claims/prepare-for-deep-auto-insurance-premium/232901645

http://auto-insurance-finders.com/wp-content/uploads/2014/06/carinsurance-598x467.jpg

http://www.insurancetech.com/claims/prepare-for-deep-auto-insurance-premium/232901645


Wearables

• 21% wear a device or use

App. to track health.

• Life and health insurers

monitor:

– Policyholder’s vital signs.

– Exercise experience.

– Location.

– Calorie intake.

http://news.cnet.com/8301-1035_3-57607524-94/wearable-tech-revenue-to-hit-$19b-by-2018/http://www.bbc.co.uk/news/business-23579404http://www.idgconnect.com/blog-abstract/3419/how-will-wearable-technology-impact-business-world

‘For businesses - implications for systems development, insight and analytics, telemetrics, leadership & competitive

advantage.’

http://s3files.core77.com/blog/images/2013/04/where-wearable-tech.jpg

http://news.cnet.com/8301-1035_3-57607524-94/wearable-tech-revenue-to-hit-$19b-by-2018/

http://www.bbc.co.uk/news/business-23579404

http://www.idgconnect.com/blog-abstract/3419/how-will-wearable-technology-impact-business-world


Mobile in context

• Where am I?

• What am I doing?

• Who’s around me?

• Where am I going?

• What would help me?

– Where

– What

– Who


http://www.bing.com/images/search?q=augmented+reality&qs=n&form=QBIR&pq=augmented+reality&sc=8-17&sp=-1&sk=#view=detail&id=01E32F95F1C7F83CA4AD38CA322D5493BBC3D713&selectedIndex=15


Preventative Apps

• Monitor conditions, submit

insurance claims, shortens

underwriter evaluation.

• Two Japanese car

insurers co-developed a

smartphone app to reduce

claims.

• Warns of possible

accidents and to establish

culpability in the event of a

crash.

http://www.japantoday.com/category/national/view/car-insurance-companies-develop-smartphone-app-aimed-at-reducing-claims

https://d13uygpm1enfng.cloudfront.net/article-imgs/en/2012/07/20/AJ201207200064/AJ201207200065M.jpg

http://www.japantoday.com/category/national/view/car-insurance-companies-develop-smartphone-app-aimed-at-reducing-claims


Health diagnostics

• Sensor-laden inks helps

diabetics monitor their blood

sugar. University of California, San Diego (UCSD)

• Novartis developing its

"smart" contact lens with

Google to help diabetics

monitor their glucose levels.

https://wtvox.com/2015/03/smart-pens-can-draw-biosensors-on-your-skin/

http://ucsdnews.ucsd.edu/news_uploads/joe-wang-pens-3-arm.jpg

http://www.bbc.com/news/business-28310697


https://wtvox.com/2015/03/smart-pens-can-draw-biosensors-on-your-skin/



Ingestible sensors

• Indicates how the medicines is working in the body.

• No battery and no antenna, stomach fluids complete the

power source.

http://www.medicalnewstoday.com/articles/276175.php

https://thetruthsoldier.files.wordpress.com/2012/09/ingestible_sensor2.jpg

http://www.medicalnewstoday.com/articles/276175.php


Smart dust/ Micro motes

• Micro Motes monitor

every tiny movement of

large structures.

• Smart dust computers

make efficient medical

implants.

http://www.newscientist.com/article/mg21829146.400-smart-dust-computers-are-no-bigger-than-a-snowflake.html#.U-Odsfm2gW4

http://www.newscientist.com/data/images/ns/cms/mg21829146.400/mg21829146.400-1_300.jpg

It might be possible to run a Google search in the physical world.

http://www.newscientist.com/article/mg21829146.400-smart-dust-computers-are-no-bigger-than-a-snowflake.html


WISPsWireless identification and sensing platforms

• WISPs communicate via RFID.

• WISPs don't need batteries.

• Consume what they scavenge.

– Stray signals from a nearby

TV for instance.

http://www.newscientist.com/article/mg21829146.400-smart-dust-computers-are-no-bigger-than-a-snowflake.html#.VRMTy_macW4

http://www.electronicproducts.com/images2/farc_packaging02_feb2011.gif

http://www.newscientist.com/article/mg21829146.400-smart-dust-computers-are-no-bigger-than-a-snowflake.html


Smart skin

• BAE Systems developing a human-like skin.

• Monitors temperature, wind speed, physical

movement, and mechanical stress etc.

http://www.architectmagazine.com/technology/a-smart-skin-for-aircraft-could-make-buildings-more-intelligent_o

http://itechfuture.com/wp-content/uploads/2014/08/Future-technilogy-The-concept-the-smart-skin-for-the-aircraft-skin.jpg



Smart skin

• Buildings clad in smart skins capable of detecting and

reporting damage from events such as storms,

earthquakes & vandalism.


http://s3.amazonaws.com/lkbkspro/archi-tectonics/lg_4faad5c4-96d4-4eaa-b133-67410a790aa9.jpg



Substrate computing

• Within the building material of structures, it will allow;

• Commercial in 5 yrs.

http://msutoday.msu.edu/news/2015/self-powered-sensors-that-communicate-could-warn-of-bridge-building-defects/

http://www.asiagreenbuildings.com/wp-content/uploads/2013/07/ICSG201209023-02_300dpi.jpg

http://msutoday.msu.edu/news/2015/self-powered-sensors-that-communicate-could-warn-of-bridge-building-defects/


Micro-climate monitoring

• AquaSpy makes soil moisture monitoring sensors.

• Goal is to help reduce water inputs.

http://www.forbes.com/sites/heatherclancy/2014/05/09/is-precision-agriculture-finally-taking-root/

http://www.forbes.com/sites/heatherclancy/2014/05/09/is-precision-agriculture-finally-taking-root/


Brain-to-computer interfaces

• Future pilots control

their aircraft by merely

thinking commands.

• Now demonstrated the

feasibility of flying via

brain control - with

astonishing accuracy.

http://phys.org/news/2014-05-thoughts-airplanes.html?sf26752737=1http://www.businessinsider.com/emerging-neuro-and-cognitive-technologies-2014-4#ixzz33lgw7ppZ

Scientifically viable in 2020; mainstream

in 2022; financially viable in 2027

http://wingwire.com/app/webroot/files/4_525_1403287387.jpg

http://phys.org/news/2014-05-thoughts-airplanes.html?sf26752737=1

http://www.businessinsider.com/emerging-neuro-and-cognitive-technologies-2014-4


BUSINESS IMPACTS


Hyper-personalisation

• Many individuals will prefer to be insured based on their

individual actions – not statistical average of a large group.

• In practice - seek out tailor made products & services. PwC

http://jumpthecurve.net/health-care/five-future-trends-for-the-insurance-industry/ http://www.pwc.com/en_GX/gx/insurance/pdf/insurance-2020-turning-change-into-opportunity.pdf

http://www.nyas.org/image.axd?id=8d8519cb-b524-4857-9d64-103befd760ff&t=634208527437630000

http://jumpthecurve.net/health-care/five-future-trends-for-the-insurance-industry/

http://www.pwc.com/en_GX/gx/insurance/pdf/insurance-2020-turning-change-into-opportunity.pdf

http://www.nyas.org/image.axd?id=8d8519cb-b524-4857-9d64-103befd760ff&t=634208527437630000


Smaller and different?

‘IoT will shrink the traditional insurance market and

change the nature of the risk landscape.’ AT Kearney

http://www.atkearney.com/digital-business/ideas-insights/featured-article/-/asset_publisher/Su8nWSQlHtbB/content/internet-of-things-opportunity-for-insurers/10192

http://media.propertycasualty360.com/propertycasualty360/article/2014/11/19/shutterstock174561506.jpg



“What business are we in?”

• In many companies, smart, connected products

will force the fundamental question,

https://hbr.org/2014/11/how-smart-connected-products-are-transforming-competition

http://2.bp.blogspot.com/-oHD1rN1NvC8/U0mycneBMhI/AAAAAAAABUM/k31MjMvbmfo/s1600/indexblogs+1.jpg

https://hbr.org/2014/11/how-smart-connected-products-are-transforming-competition


Innovations shift market boundaries

• IoT ecosystem will entice

players from other markets;

– Automotive OEMs.

– Home security companies.

– Cable and mobile

providers.

– Energy/Utility providers.

– Insurers.


http://esante.gouv.fr/sites/default/files/styles/728x302/public/06/20140612_ACTU_CNIL_Quantified_Self.jpg?itok=cETgV8So

Compete across traditional

industry boundaries.



• Redefine pricing and underwriting.

• Reduces value of some forms of insurance.

• Redefined loss and claims processes.

• Higher customer satisfaction.

• New opportunities in data management.

• Reorganised distribution and partnerships.

• New forms of ‘hacker’ risk.

• Requires reorganisation and modernisation.

Insur

ance

Impa

ct


If you want to get ahead – you need to look ahead

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Insurance Re-Boot 2 · Global Futures & Foresight With change comes risk • Root causes of...

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