Yes, another article on data and technology. We make no apology for this: it seems to be the subject of the moment within our industry (no bad thing) and we ourselves believe it is something for which insurers, reinsurers and distributors – indeed all stakeholders – need to have a strategy. Technology and its implications – and they are far-reaching – should be firmly on your radar.
First, consider some of the things happening now or gathering pace in the background:
- ‘23andme’ (www.23andme.com): genetic profiling for US$99. Following a ruling by the US Food and Drugs Administration 23andme no longer provides ‘health reports’, but its customers can still find out about predispositions to inherited diseases. This is not a full genome analysis – that would cost a great deal more, although prices are coming down – but it is maybe enough to satisfy people’s curiosities and concerns (and we know one of their customers).
- Full-body MRI scans cost something like US$1,500 to US$2,000.
- Google X or Google[x]: Google’s research facility focused on making technological advancements. Its output includes: Google Lens, a contact lens that monitors blood glucose levels by analysing tear fluid; Google Glass (eyewear incorporating a screen and a camera; self-driving cars; drones that can deliver goods more quickly than vehicles snarled up in city traffic; and Liftware, a spoon for Parkinsonism sufferers that counteracts tremor (this via the acquisition of the firm Lift Labs).
- Google Fit: an open platform that lets users control their fitness data. “Google Fit lets developers build smarter apps and manufacturers focus on creating amazing devices.” (According to https://developers.google.com/fit/.)
- Google Now: an app for Android, iPhones and iPads that helps you manage your day via “The right information at just the right time.” Importantly, it tracks your movements, including how you moved – cycling, walking, etc – and the route you took.
- Google has a licence to write property/casualty insurance business in the UK. It already has operations in the Netherlands and France.
- Apple HealthKit “… allows apps that provide health and fitness services to share their data with the new Health app and with each other. A user’s health information is stored in a centralized and secure location and the user decides which data should be shared with your app.” (According to https://developer.apple.com/healthkit/.)
- Apple IOS 8 has a health app that gives users an easy‑to‑read dashboard of their health and ﬁtness data.
- Medelinked (www.medelinked.com) has a ‘Health Cloud’ that empowers individuals to take control of their health by building their health picture online, sharing it with a trusted network of health providers and managing health outcomes over time. The firm claims you “… can get health advice in real time and chat instantly to your health providers by iMessage, voice, text, email and video – all from inside your secure Medelinked account.”
- Picnic Health (www.picnichealth.com) gives users easy access to their health records. Per the website: “We gather your records; you understand your care; we keep your doctors informed.”
- Theranos (theranos.com) is a firm that offers ‘customer-friendly’ lab testing services at remarkably cheap prices – typically less than ten dollars. One of its wellness centres will be coming to a Walgreens near you.
- Kroodle (www.kroodle.nl): a Dutch insurer that you access entirely through Facebook.
- The Internet (or Web) of Things: a concept in which connectivity and new functionality are applied to everyday appliances, devices and even objects like coffee cups, enabling a whole new range of information, services and convenience. It has been predicted that 26 billion items will be connected by 2020. (Another prediction is 50 billion by 2020. Consider that there could be ‘a lot’.)
We can infer from these developments that technology powers ahead at a furious pace. It remains to be seen whether people need and want to adopt all that is possible but it would be reasonable to assume that life will be significantly different in future. How soon that future will arrive remains to be seen but we are reminded of the adage about over-estimating the immediate impact of technology advances and underestimating the long-term ones. (That’s normally attributed to Bill Gates but we’re not convinced: for a start, Brainyquote.com doesn’t list it.)
Nevertheless, the developments reinforce the view that people will know ever more about their health. Already they use the Net to research their medical conditions and interact with fellow sufferers via social media – and via Patientslikeme (www.patientslikeme.com). But in future direct access to their physician records will be the norm; maybe patient files will cease to be called ‘physician records’ because they will belong to the patient, not the physician. And people will be running their own tests – be that labs, scans or genetic profiles – as and when they see fit.
The scope for antiselection will increase. And insurers will need to reconsider the sources of risk information they need for underwriting.
Google’s name figures large in the list above. Google is investing heavily in R&D, and not just in classic information technology. We should all take this as both an indicator that Google will be truly a serious player in many fields in the future, but also that the traditional, familiar big brands may not be around forever. Importantly, the big, increasingly powerful new firms, via technological innovation, their access to data, their understanding of customers, their creativity and their willingness to take risks, have the ability to disrupt the business of traditional players.
Assuming that sufficient risk uncertainty exists in future to sustain a life insurance industry, what will products look like? And who will be providing them? Maybe not the present incumbents. Once a serious disrupter comes along, the days of the traditional players are numbered – unless they can change their game. And on past performance many firms will find that a real struggle. That’s true not just of the insurance industry, but we think that myopic, slow-moving and risk-averse insurers are especially vulnerable. Reinsurers, with their diversified activities, are maybe less so, but even they will probably look a whole lot different in say ten years’ time.
A 2014 survey found that nine out of ten UK insurers had no ‘big data’ strategy, and of those three-quarters said it would be a priority for 2018 and beyond. Too late! Doesn’t bode well, does it? And we suspect that sort of picture prevails pretty much all over the world.
And will these new forces in insurance need underwriters? How will underwriters fare in a new world in which artificial intelligence is much more powerful? Two researchers at Oxford University1 have concluded that “… algorithms for big data are now rapidly entering domains reliant on pattern recognition and can readily substitute for labour in a wide range of non-routine cognitive tasks.” They say that jobs least at risk are those that are big on creativity and social intelligence.
The pair produced a list of over 700 jobs together with their potential for automation. Top of the list and least likely to succumb to automation are recreational therapists (risk 0.28%). Right near the bottom, with a probability of 99% are insurance underwriters…
- Frey CB, Osborne MA. The future of employment: How susceptible are jobs to computerisation? http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf