Other parts of this series:
The theme of the 2016 World Economic Forum, in Davos, was “Mastering the Fourth Industrial Revolution”. This couldn’t have been more appropriate for insurers, who certainly don’t need a gathering of economists and business people in a Swiss ski resort to tell them they’re facing the disruption and transformation of their industry.
The organizers of the WEF explained what they mean by Industry 4.0: “Building on a ubiquitous and mobile internet, smaller, cheaper and more powerful sensors, as well as artificial intelligence and machine learning, the Fourth Industrial Revolution is distinct in the speed, scale and force at which it transforms entire systems of production, distribution, consumption – and possibly the very essence of human nature.”
They confirm what we have been saying for some time: “the challenges are as daunting as the opportunities are compelling.”
This theme was explored in a wide variety of ways. I thought that, for insurers, there were two sub-themes that were particularly relevant and thought-provoking.
The first of these is the growing importance of platforms. Platforms have not only given us a new model for organizing commercial activity and creating value. As many remarkably successful examples have shown, they are powerful engines for economic growth and societal transformation. The challenge facing insurers is how to develop effective strategies for collaborating with, or creating, platforms that will define a different future for their businesses.
Accenture’s CEO Pierre Nanterme told delegates at Davos that our 2016 Tech Vision survey – due to be published shortly – found that 84 percent of insurance executives believe platforms will be key to their growth strategies. So let’s not deceive ourselves that they are unique to internet giants and tech start-ups.
The second sub-theme that I found especially pertinent was the advances in machine learning and artificial intelligence, and their impact on workforces and the nature of work. A common thread in the discussions was that in the past couple of decades, technological innovation delivered more impressive welfare gains than financial benefits. In other words, people’s lives were improved more than companies’ balance sheets. The expectation, however, is that machine learning, AI, the Internet of Things and everything that accompanies these will, in the near future, result in an impressive increase in corporate productivity.
I particularly liked one presenter’s comment. She said that in the past there had been a great effort to make humans into better machines. This was no longer necessary, because machines were getting so much better at being like humans. In an age when human – machine collaboration is the key to both greater productivity and more enriching work, this is an important achievement.
These, and all the other related issues that were aired at Davos, raise a crucial question: are insurers equipped to counter the threats of disruption and to take advantage of the opportunities it simultaneously presents?
In my next two posts I’ll discuss in greater detail the potential of platforms for insurers and the impact of machine learning and AI on the insurance workforce of the future. I hope you’ll find them interesting. In the meantime, you might want to watch these panel sessions from Davos.