The world today is faced with Globalization, a concept many have not managed to grasp, the distance between continents, countries are shrinking and world economies are becoming even more interdependent. The Fourth Industrial Revolution age is beginning to shape how businesses function and the world leaders need to examine how society and business should fundamentally and structurally adapt in line with today’s vastly changed world. The reality is society is facing many risks today than a few years ago, from security of information to the impact of artificial intelligence on jobs.
It would be folly for any business not to watch these trends and developments very closely and, more importantly, not to ensure that they are integrated into everyday business practices. Over the coming years, the innovation-driven economy will continue to fuel fast-paced change and technological disruption. Every sector – health, communication, production, transportation, etc. – will not only be affected but will be transformed. This will obviously have huge implications for insurers globally.
Taking health care as an example, CIO.com reports that “the AI market is set to experience a compound annual growth rate of 40 percent through 2021, largely because AI has the potential to improve health care outcomes by 30 to 40 percent while simultaneously cutting the costs of treatment in half”. The implications for medical aid and insurance will be fundamental.
And according to prescouter.com, “the use of AI to predict the paths of pedestrians and cyclists will decrease traffic accidents and injuries”. If this is true, it would have a major impact on car insurance underwriting.
So as AI and automation continue to advance, the insurance industry is developing new ways to assess and underwrite risk. There is so much to consider and define for insurers. We anticipate that unprecedented types of claims will cross our desks over the coming years and the industry is asking:
- Who is responsible when a self-driving car accidentally kills someone?
- If surgery is performed by a robot, how will medical insurance change?
- How many jobs will be culled by automation and how many will be created millions of jobs it’ll create.
- How dramatically will workplace risks changes as a consequence?
The WEF will also be looking closely at climate change as unpredictable weather patterns and an increase in catastrophes continue to wreak havoc globally. Insurers play a crucial role in rehabilitating communities after a disaster. Going forward, we’ll continue to focus on how to predict and proactively mitigate risks synonymous with weather events. AI could make the prediction side more accurate than we can currently imagine.
Both the public and private sectors will be influenced and are likely to form stronger strategic partnerships in 2019, and beyond, to the benefit of our greater society. With sustainable development a focus for this year, we are likely to see more corporates partnering with the private sector to address issues such as education and the environment. We can also expect to see ESG (Environment, Social and Governance) factors being more overtly prioritised in decision-making, especially given the ubiquity of the climate change conversation.
For South Africa 2019 is an absolutely pivotal year. The general election will set the tone for the next few years politically but also, crucially, economically. Insurance has a huge role to play in transforming any economy by protecting citizens and business from major financial risks. As such, we will be working hard alongside government and other stakeholders to bring about meaningful reforms to invigorate economic growth and ensure insurance is more inclusive going forward.
So while local insurers will dedicate a lot of their time to pivoting into the fourth industrial revolution, we will also expect a landmark year in terms of our country’s future as we help businesses and individuals mitigate their risks for a lasting, positive impact on our country.
Article written by Lizé Lambrechts, CEO of Santam