Companies like Dell, Microsoft, Motorola, Nokia, Blackberry, Sun Microsystems and Yahoo lost their edge because they refused to be innovative and embrace change. However, others like Amazon, Apple, Cisco, Samsung, Google, Huawei, IBM and Oracle continue to be major role players because they remain innovative and embrace change.
We are within the fourth industrial revolution and the world as we know it is undergoing massive transformation and insurance is no exception at all. Most, if not all insurance products present today will be irrelevant and redundant in the next coming year. Insurance companies continue to invest resources into the digitization of an existing value chain and are not building a new value chain for a fourth industrial revolutionized world – this is money going to waste. Telematics, chatbots, automation and mobile apps are not all that there is to innovation in insurance.
The internet of things, sensors and artificial intelligence will have the greatest impact on the insurance industry and it will be important for companies to actually study and visualise the impact these will have on the interests they currently protect and start building products and systems for that future. It is also important to design products for new members of value chains in those industries the interests are from like neural networks which will be part of every value chain in a fully digitalized world.
Car insurance as we know it for example will be useless in the next coming years. Cars of the future will be self-driving, will perform self-assessments after accidents and will be their own collision repair technicians. So, what you will have on the road is actually a computer with wheels and rather a typical car. A traditional car insurance product will not work and modifying current products will not help too. The mobile apps and chatbots for insurance will be useless because cars will interact with insurers independently of their owners or users. Patterns of ownership are also changing with the arrival of on demand services. More people find it more convenient not to own a car and this is proven by the decline in drivers’ licences amongst millennials in the United States of America.
Life insurance is also being disrupted and might end up being extinct. People are tracking their health behaviour, getting real time advice on lifestyle changes and doing all they can to live longer. The entrance of 3D printed organs and ingestible sensors will bring humanity very closer to immortality and the continuous discovery of cures for diseases like cancer, diabetes, hypertension and AIDS will also do great harm to life insurance. People are actually becoming more hopeful and positive about living and are not preparing that much for death anymore.
It’s still early days but the fourth industrial revolution is a reality and insurance companies need to take transformation seriously or risk being irrelevant or extinct in a digital future.