The Two-edge Sword of Technology: Disrupting the Disruptors0 November 27, 2015 at 10:43 am by Patrick Vice
New technology options offer a rich environment of functionality combined with an engaging user experience. This combination can produce intended and unintended consequences. We believe the winners will be those that can plan for the unknown as well as the known. Here are a few examples.
Insurance sharing the cyber front line
Insurance professionals increasingly face risk that is directly or indirectly related to technology. Insurers have engaged with terrorism by designing products that help mitigate consequences of cyber hacking.
Cyber has had a slow uptake. But as we wrote last week, we are seeing businesses – large and small – turning to insurers for specific components of their security plans. While there are learning curves, and, in spite of less than perfect amounts of data, there is a robust market forming. We will have a dynamic panel of cyber-experts at #ICTC2016.
And, speaking of data, ….
Underwriters are also looking at technology driven companies and finding the value of data and technology in analyzing new risk. This can allow them to be proactive, rather than reactive. Ride sharing is a case study in progress.
The original construct for Uber was that it was just a technology company which provided a service to link drivers to passengers. In this role, Uber argued, it was removed from any insurance requirements.
That didn’t work well with regulators, and Uber has worked to develop a different model which recognizes the differences that ride-sharing offers from traditional services, opening doors to insurers.
Interestingly, one of the first insurance companies to embrace this is California’s Metromile which provides ‘pay-per-mile’ underwriting, enabled by telematics technology.
A twist (or two) on the Mobile Road…
There are some other technology applications that could change the mobility game again. Earlier this year, Uber executives were quite open about their interest in autonomous (driverless) vehicles. Writing in Business Insider, Jonathan Camhi notes:
“If it could replace the cost of paying its drivers with autonomous cars, Uber could dramatically reduce its prices to the point that taking Uber rides everywhere would be a cheaper transportation option for most people than owning a car.”
That could be bad news for insurers. Or not, depending on which edge of the sword is used.
Kyle Samani, CEO of Pristine, posted an article in Tech Crunch which provides real caveats. Uber’s business model is based on “localized marketplaces of supply and demand for drivers.” The liquidity of this market place is key.
According to Samani, human drivers control the supply by regulating their availability. This is not true with autonomous vehicles, which could “massively outstrip demand.” Expenses would drop substantially. Revenues could drop further, especially if there are other alternatives.
What could disrupt the disruptors?
Our colleague, Catherine Kargas from MARCON has recently been exploring MaaS – Mobility as a Service. According to Kargas, this is a future where providers (private entities, governments) supply “Multimodal transportation networks, combining car- and bike-sharing solutions, railway, metro (subway) and bus networks, <which> are facilitated by complete information available (possible mobility options with time and cost) free of charge on a smartphone.”
While this is speculative, pilots are being planned. If I had to lay down odds, this would drive significant competition in the shared services economy, and would offer unique opportunities for creative, data-driven insurers.
Catherine is a developing a panel which will shine light on all the corners of this complex, important area.
Strength from the core to the extremities
Many insurers have been investing in new core technology. Many of the solution providers have been aligning their offerings with new digital functions, which would provide infrastructure capably of integrating analytics, big data, and new business requirements.
There are good examples of flexible implementations which allow organizations to learn how to capitalize on new functionality without sacrificing rapid implementations. The suppliers and implementors will be available at #ICTC2016.
And #ICTC2016 will provide the venue….
Just as insurers are developing a strong infrastructure, Insurance-Canada.ca, Inc. is developing a strong program which will allow you to see the multiple edges of the swords that will trim our opportunities and profits or or cut a path to the dynamic future.
We are adding new information on a daily basis, so check us out at our #ICTC2016 site.
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