If 2016 was a year Oscar Wilde’s advice to ‘expect the unexpected’ should have been heeded, then let’s make 2017 the year we actually listen to the old bard.
Insurance Business is examining emerging and evolving trends in a year promising breakthrough technologies, heightened conflict and an unprecedented president.
Jardine Llyod Thompson (JLT) Group believes 2017 is the year transformations in the insurance industry will really take shape while the industry feels the pressure of robots and automation.
“Storm clouds are forming over the insurance industry driven by the acceleration and impact of technology,” Douglas Turk, chief marketing officer of JLT Group said. “We are entering a period where consumer perception will begin to include insurance and risk as an embedded component of transactions.”
Many commodities including smartphones already come with warranties built into the shelf price, mitigating the demand for phone insurance — and Turk believes that will become much more common in the near future.
“For instance, the consumer perception of auto insurance will inevitably change, fueled by the adoption and usage of the driverless vehicle,” Turk said. “Original equipment manufacturers will need to add to their current warranties that the driverless vehicle will get its passengers to their destination safely and securely. The cost of the insurance, much like a vehicle warranty today, will become embedded in the purchase price of the vehicle.”
This principle could then be extrapolated to other potentially paradigm-shifting innovations like Hyperloop, where automation is perceived to eliminate risk.
“With no actual driver, consumers will question the need for an auto policy and rely on the OEM warranty to guarantee the vehicles functionality and fit for purpose,” Turk said. “The ability for the driverless car to get the passengers to their destination safely means that the vehicle will not hurt others or damage property in the journey.”
Moving towards a service model approach rather than a “policy just-in-case” style of coverage appears as the overall trend, Turk argued.
“The convergence of these factors has the potential to shift perceptions on insurance transactions, and while insurance will still be required, the source and approach may fundamentally change,” he said. “Outside of the consumer auto space, we are already seeing a similar shift in commercial mechanical and HVAC systems with the move from an indemnification model to a service based model. Insurance companies in this space are focused on the service and maintenance elements enabled through the Internet of Things.”
Between market demands and the surge of life-altering tech, insurance is potentially embarking on a transformational year.
“Will 2017 be the year that insurance begins to morph and become integrated into product and service transactions and the economic trades begin to shift across industries?” said Turk. “My view is that this trend will continue to spread and 2017 is likely to be a milestone year in this fundamental shift.”
As the world recalculates its annual outlook, it’s useful remembering a flamboyant writer’s most repeated quote: “To expect the unexpected shows a thoroughly modern intellect.”
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