Emerging and converging technologies are reshaping the insurance industry, to the point that it may hardly be recognizable in a decade’s time. The business of insuring against risk is being transformed by a variety of trends and technologies. Here are a few examples.

Drones

If you’ve seen footage of the aftermath of the recent flooding in Houston, you’ve likely noticed the swarms of drones observing the damage. Drones have become a powerful tool for insurance companies to quickly and inexpensively assess damage in previously hard-to-reach or even inaccessible areas. Regulation changes last year opened up the world of commercial drone usage, and utilities, telecoms, and insurance companies have been fast-adopters due to the incredible cost-savings and benefits from their use. Imagine trying to assess roof damage to an eight-story apartment building after a storm. What once required crews and ladders and potential worker-safety issues can now be done with one person and a drone fitted with an HD camera. And no potential safety issues! Drone technology will continue to improve and become more available, and in five years, it might be rare to see an insurance company without “drone operator” as their organization. common job title

Self-Driving Vehicles

Advancements in automotive technology have long impacted the insurance industry. Seat belts and airbags reduced deaths and injuries, and ever-increasing safety regulations have forced manufacturers to use technology to make their vehicles safer for their customers. Now, we’re at the doorstep of the shift to autonomous vehicles. Current vehicles with driver-assist technologies, while not full “Level 5” self-driving, still provide increased safety and reduced accidents through features such as automatic braking, lane-change assist, and driver awareness sensors and warnings. As we move to vehicles that literally “take the wheel” from human drivers, we can expect massive safety benefits and a vast reduction in driving-related injuries and deaths. We can also expect a decline in individual ownership as companies such as Lyft and Ford introduce fleets of self-driving electric vehicles on-demand.

Both of these trends significantly impact the insurance industry. As injuries, deaths, and ownership race toward zero (although it’s not likely we’ll ever reach no accidents or private ownership) the rates and revenue of insurance companies should be expected to decline. How much can be charged per month to a vehicle that has almost no chance of getting in an accident, and even less of a chance of causing or allowing passenger injury or Certainly, large fleets of autonomous vehicles will require insurance, but per-vehicle rates will likely be much lower than if they were privately owned due to the leverage of large corporations and brutal competition for a shrinking customer base. Automotive insurance is a $200 billion dollar market globally, and even small annual percentage changes in accidents or ownership make a huge financial impact.

Insuretech

Much like what’s happened in finance with new “ ” startups and companies such as Stripe, Wealthfront, Kabbage taking bites out of legacy finance company’s lucrative businesses, startups are beginning to take on established insurance providers. Initially, these new competitors go after pieces of the business, practices that are currently inefficient and but expect these to grow into full-service competitors to traditional insurers. Regulatory challenges and business model complexity may initially slow their progress, but their technology will continue to improve and their impact on the insurance industry will grow stronger. Examples of potentially disruptive companies include Lemonade, Cuvva, and Cyence.

Artificial Intelligence

As world-renowned computer scientist Andrew Ng has “AI is the new electricity.” It will power everything, yet will not always be visible – just like electricity. Think of the impact that the introduction of electricity had on the average home or business. It completely redefined what was possible, and sparked countless new businesses and products. The adoption and integration of various forms of artificial intelligence (e.g. machine learning, deep learning, cognitive computing) into our lives and careers will be no less transformational.

In a world overflowing with the data created by users on social networks, smartphones, connected internet of things devices, and workforce communication platforms, the opportunity to leverage it is dependent on systems that are able to process all that data and turn it into actionable information. Insurance companies can use powerful new AI-enabled platforms to better assess risk, determine rates, anticipate insurable events, and so much more. We are certainly only in the early days of the potential applications of the different forms of AI, and while applying these technologies may today be a competitive differentiator, in the near it will be table stakes – required to even compete.

Blockchain Technology

In 2008, a whitepaper was posted online describing a new decentralized digital currency, free from the influence of central banks and not pegged to any fiat currency. Its initial application was Bitcoin, but since then the underlying technology – the blockchain – has been applied to everything from “smart contracts” to distributed data storage. Now a technology buzzword, it seems blockchain technologies are being applied to every industry and operation.

Blockchain technology is incredibly complicated, but the possibilities are endless, and will significantly impact the insurance industry. Potential benefits include near-zero cost international money transfers, smart contracts that execute automatically based on previously agreed upon criteria and the ability to manage customer information across platforms and companies. Insuretech companies such as Everledger have identified the potential here and are working to capitalize on the opportunities blockchain technology creates.

With technology advancing as fast as it is today, there is an almost inexhaustible supply of new technologies and trends that could reshape the historically traditional insurance industry, and new companies will push the boundaries of what an “insurance company” is and what it does in the near-future. The challenge for established providers is to be adaptive and dynamic enough to spot the opportunities these new technologies create – before they create challenges … or even existential crises!

Jack Uldrich is a global futurist and the author of 11 books. Simon J. Anderson is the founder of Venture Foresight, a company that helps leaders be more future resilient. They are co-authors of Foresight 20/20: A Futurist Explores the Trends Transforming Tomorrow. Learn more about Jack at www.jackuldrich.com and more about Simon at simonspeaks.com.