Garry Booth comment: Future shock warning - FREE

Garry Booth comment: Future shock warning - FREE

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Garry Booth commentAlvin Toffler, the author of the influential book Future Shock and other works that predicted disruptive social, economic and technological change, died in June at the age of 87. Published in 1970, with its forecast for “information overload” and for too much change in too short a timeframe, Future Shock touched a nerve with an anxious public selling 15m copies.

Toffler predicted the rise of the internet and the decline of the nuclear family in works that led world leaders and business executives to seek his advice. The Third Wave, in 1980, was another hugely influential work that forecast the spread of emails, interactive media, online chat rooms and other digital advancements.

He also foresaw increased social alienation and rising drug use.

Some of what he said about society could be applied to the insurance industry’s collective state of mind. Toffler argued that society is undergoing an enormous structural change, a shift from an industrial society to a super-industrial society. He believed the accelerated rate of technological and social change left people disconnected and suffering from “shattering stress and disorientation”.

Judging from the insecurity expressed by conference speakers and op-ed writers, the insurance industry is similarly future shocked, fearing for its relevance.

One of Toffler’s most famous assertions was: “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.” Insurance CEOs take note – and get a grip.

Fintech tie-up will be the future for many

“Regulatory and capital barriers to enter the insurance industry limit the impact of ‘standalone’ fintechs. However, the marriage of fintech capabilities with a backer who brings in capital, regulatory fit and a recognised brand would be transformational for the sector.” So said one respondent to PwC’s study into how how insurtech is reshaping insurance.

Nine in ten insurers fear losing part of their business to fintechs, the study found. Margin pressure and loss of market share are cited as the top fintech related threats.

Yet despite these emerging trends, a big disconnect exists between the amount of disruption perceived and insurers’ willingness to invest to defend against and/or take advantage of the innovation, PwC found: 43% of the industry players claim they have fintech at the heart of their corporate strategies, but only 28% explore partnerships with fintech companies and even less than 14% actively participate in ventures and/or incubator programmes.

Apparently the main reason for insurers not collaborating better with fintech companies is they perceive too great a difference in management and culture. But surely that’s exactly what insurance needs: new ways of thinking and organising.

Bladerunner seeks cover

Toffler would no doubt have felt vindicated by the speed with which the robots are taking over: or industry 4.0, as it is being called in conferences everywhere. Insurers are much exercised over the implications for the commercial insurance market of automation in manufacturing and services. That’s both in the sense of new unforeseen emerging risks and traditional insurance products becoming obsolete.

Now the EU has come up with a new dimension: robots’ rights and new employment risks.

Robots’ growing intelligence, pervasiveness and autonomy in factories requires a rethink of everything from taxation to legal liability, a draft European Parliament motion, dated May 31, has suggested.

The draft motion has called on the European Commission to consider “that at least the most sophisticated autonomous robots could be established as having the status of electronic persons with specific rights and obligations”.

It also suggested the creation of a register for smart autonomous robots, which would link each one to funds established to cover its legal liabilities.

It all begs the question for insurers, are we going to see a new class of workers comp come out of this?

Cyber cover unfit for purpose

Most people agree that the insurance market is struggling to get its head around cyber insurance. A new survey from Advisen concludes that cyber insurance is “broken”, creating a false sense of protection for organisations, and there are gaps that need to be bridged to fix it.

Only 48% of the chief information security officers (CISOs) and other risk professionals surveyed found cyber insurance at least “adequate” for addressing a data breach. The reason for the disconnect? Only 30% of underwriters and 38% of respondents believe they even speak the same language.

“Senior executives are now insisting on cyber insurance protection. As a result many CISOs and other InfoSec professionals are interacting with underwriters for the first time. CISOs, and even the risk managers charged with buying insurance, often do not fully understand what is covered by their cyber insurance policies,” said David Bradford, chief strategy officer at Advisen.

Dare I say it, but where are the brokers when you need them?

By Garry Booth –

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