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Confronting a constantly changing world these days, time seems to move extraordinarily fast. Startups rise, sparkle and often burn out quickly. Stalwarts, whose names were synonymous with their products, simply disappear into mergers and/or oblivion.
But it is much more than that. Technology is pushing business to change course and we have the power to either pivot in a new direction – or simply march on. Before the markets get too far afield, a thoughtful pivot would be wise.
This is necessary because certain technologies are totally changing practices and industries. We’ve moved well beyond automation and into transformation and now disruption. Already we’re seeing this in industries like health care, where independent medical and therapy practices largely have been replaced by hospital-owned health biospheres.
In the insurance world, five disruptive technologies are leading the charge and will drastically affect the industry in next three to five years: autonomous vehicles, Internet of Things (IoT), robotic process automation (RPA), drones and blockchain.
Autonomous vehicles – While autonomous vehicles may not be crowding parking lots, vehicles with driver warnings and autonomous functions already are on the road. Features like emergency braking that can stop or slow a vehicle to avoid a collision, lane-drift avoidance systems and self parking are available on high-end cars, with more features offered for less-expensive cars each year. Meanwhile, totally autonomous cars are being developed and tweaked.
Regulators at the state and federal levels are only now starting to grapple with self-driving vehicles. The National Highway Traffic Safety Administration has promised to produce guidance by July.
Beyond the technology for these cars, the auto industry is trying to figure out the human element in driving. Just how much autonomy are drivers are willing to give their vehicles? When it publicized its fleet of autonomous vehicles, Google stressed that drivers could take over control of the vehicle at any time. But will there be a market for vehicles without pedals or steering wheels — and would regulators allow such vehicles on the road?
From an insurance perspective, autonomous vehicles could dramatically reduce accident frequency, since about 90% of accidents are attributed to human error. Still, expensive sensors may substantially increase the severity of accidents that do occur, the same way that air bags and anti-lock brakes did when they came on the scene. And totally autonomous cars beg the question: Just who is the driver? Do you primarily underwrite the autonomous car or the person sitting in the driver’s seat? With companies like Volvo, Mercedes-Benz, Nissan and Toyota all in various stages of developing autonomous vehicles, insurers will have to address these complex issues soon.
IoT (Internet of Things) – the capacity of items to gather and send real-time data to clients and businesses — is clearly a business disrupter that most insurance executives have taken to heart. The most obvious example is vehicle telematics that can adjust premium on the fly.
Starting in the 1990s, vehicle telematics enabled location devices like LoJack to find stolen vehicles and services like OnStar to assist passengers with emergency help. In time, public opinion shifted and insurance customers were willing to accept telemetric “black-boxes” monitoring their driving in exchange for premium discounts. And their use has expanded ever since. Globally, the number of active original-equipment telematics units installed in autos is expected to reach 159,000 by 2020.
Accenture’s 2015 Insurance Distribution and Agency Management Survey of more than 400 executives in 20 countries found 61%have defined strategies, launched pilots or launched products related to connected homes or buildings. That planning or action rises to 62% of executives involving health/fitness monitors and 63% for other wearables. In fact, 41% already are testing or using personalized real-time digital/mobile services to help customers identify, manage and prevent risks.
Already, the Internet of Things can alert a homeowner of a pot burning on the stove or a caregiver that an elderly parent has not taken medicine at the proper time. German insurers just announced they are equipping motorists with a speed sensor device that detects a crash and uses an app on the driver’s cell phone to call an emergency center to get help. The next generation of IoT will be delving even deeper into our lives, producing more data and the need for analytics behind the data and managing the data. There will be issues with keeping personal data secure and perhaps legal issues emerging around what personal information a business can gather from individuals.