11. Insurance: from “recovery after risk” to “prevention of risk”
Today we insure our home, our car … ourselves from accidents and insurers evaluate the risk such accident may happen. To do that they are using statistics and more and more try to customise the risk evaluation to be as accurate as possible . It makes sense, of course.
However, technology evolution -read IoT/Internet of Things, pervasive communications and massive amount of data make it possible to use this prediction of risk to … avoid it. Hence, why not pay for a service that is actually aiming at reducing my risk? Think about having sensors at home that can detect any increase in temperature, a tiny whirl of smoke and some actuators that can sprinkle the area to extinguish an incipient fire, or car sensors that can step in to avoid a collision or immediately report a theft attempt sending a drone to record the thieves (and possibly scaring them to the point of giving up). Think about having a virtual doctor monitoring your vitals and stepping in in case of a red flag.
We are already starting to see these kinds of services, today provided by specific companies. In the future, however, it makes sense to imagine them provided by insurance companies as integral part of the package. It is usually way cheaper to be proactive rather than stepping in once the damage has been done. This is a very strong incentive to insurance companies to take advantage of new technologies and move into the area of risk prevention!
Artificial intelligence coupled with sensors will be able to create awareness, evaluate risks in real time and activate contrasting actions to decrease the risk (at the very minimum to decrease the damage). Gone will be the time of a statistical evaluation of risk, much more important is the detection of risk here and now and the implementation of avoidance measures.
This is basically what this Megatrend is all about. It is important because it foster a change of paradigm. It is not a given that present insurance companies will move into this new setting: it might be difficult for companies that have been growing on a lay back approach (see what happened, take notice to calculate future insurance premium, delay payment as much as possible and thrive on the capital you keep harvesting… may be some insurers will object to my vision, but I can tell you it is rooted in experience) to take a lean forward approach, interact with the customers’ lives and assets and provide guidance/step in with actions in real time. Insurers don’t have organisations nor systems designed for real time action.
This is why I tend to favour a scenario where companies that are today providing real time support/monitoring will be in a better position to become the insurers of tomorrow. There will be exceptions, of course, but if I have to bet, I would bet on a fading away of current insurers and the rise of new players.