Insight: Unexpected Opportunities
How advances in technology are transforming the risk and insurance landscape.
- TBA - Writer
- October 2015
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Tim Berners-Lee, one of the visionary founders of the World Wide Web said in 2009: "The Web as I envisaged it, we have not seen it yet. The future is still so much bigger than the past." In just the past few years, this statement--with its implications for an expanding digital landscape--has been proven correct in unexpected ways.
Consider the advances in technology that are inspiring so many new practices in science and business: drones above us, ridesharing applications on the roads, social media analytics, and the Internet of Things at home. Each of these innovations is changing the way that people trade, travel, and communicate--and, by extension, ways that we can better insure against risk.
The rise in use of commercial drones, for example, means a great deal more than the prospect of aerial home deliveries. Drones are transforming the way that insurers handle claims, survey properties and assess remote risks. It may be only a matter of time before businesses in many industries are using drones in some areas of operations. As leaders in those businesses think about how drones might help make them more profitable and efficient, insurers also will likely be evaluating how to address the expanding exposure.
Providers of ridesharing services, also known as transportation network companies (TNCs), are connecting drivers and passengers in countless transactions each day. With students and retirees employed as drivers, TNCs are expanding rapidly and now operate across 40 states and in 130 U.S. cities. Endorsements will need to cover the scenarios that sharing any vehicle raises, and insurers will likely have to discuss ridesharing's risks with potential policyholders during the underwriting process.
In this digital age, the practice of mining data from social media has become nearly universal among property/casualty insurers. Some claims adjusters are using online dashboards to view information that claimants have posted on publicly available social platforms. These digital windows are open to the insurance underwriting process and can help agents identify cross-selling or savings opportunities, or to spot potential inconsistencies on policy applications.
As the digital revolution continues, the concept of an Internet of Things is becoming a reality, with multiple smart devices and appliances connected for remote control by the homeowner. Beyond the obvious benefits, there may be substantial risks to security that raise insurance questions. Not long ago, who expected that a car's steering and braking could become vulnerable to malicious hacking? And how many policyholders understand that cyber criminals can hack into other Internet-connected devices as easily as into a home computer? It takes little imagination to see what effects a connected world might have on manufacturing, retail businesses and financial services.
In his pathbreaking book, Against the Gods: The Remarkable Story of Risk, economist Peter L. Bernstein wrote that "by showing the world how to understand risk, measure it, and weigh its consequences," insurers have successfully "converted the future from an enemy into an opportunity."
Just as Berners-Lee predicted, those opportunities keep getting bigger.
(Best's Review columnist Scott G. Stephenson is chief executive officer of Verisk Analytics. He can be reached at insight@bestreview.com.)
