In my last blog, I wrote about the first four trends in the insurance market. Here are the last four that are sure to influence the future of insurance in the next 10 years.

5. Artificial intelligence driving transformation
Artificial Intelligence (AI) is transforming how we interact and has the potential to change society around us. From highly sophisticated robots and driverless cars, to a wide range of ‘under the bonnet’ techniques that use AI, the market is likely to grow from $3 billion in 2016, to $90 billion by 2025. AI technology is also transforming the world of financial services. Insurance companies of the future will offer personalized communications and decisions based on detailed profiles of each customer. They will employ customer profiling and algorithmic sorting to assess risks and precision-target offers.
Implication: Machines will take over routine work and remove the need for human administration work. Insurance workflow will be focusing on human interactions plus usage of data and IT.

6. IoT and omnipresent data collection
More and more data are being gathered about people, covering both online and offline behaviour. With perhaps hundreds of billions of sensor-equipped devices being connected to the Internet over the next 10 years, the amount of data gathered will grow exponentially. Automated analysis of this “big data” can help businesses know their customers better, predict market movements, improve employee performance, and boost process efficiency. The key lies in the analysis of data; interpretation and execution are differentiators. Advances in the life sciences – genomics research in particular – are also producing significant amounts of actionable data. This enables new health and behavioural insights.
Implication: Increased focus on partnership and partner management requires new competences. Ecosystem partners will focus on time to market and product flexibility with products broken down into smaller units. There will be a push by partners for standardised integration and higher performance.

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7. Rise of ecosystems
The growing importance of customer-centricity and more seamless user experiences is accommodated by a rise of ecosystems, where services are bundled together. This is exemplified by Amazon’s decisions to launch AmazonGo and acquire Whole Foods; Tencent’s and Alibaba’s service expansions; and the wave of announcements from other digital leaders heralding service expansion across emerging ecosystems. Digital leaders are launching tools and services to increase their customer base, expand their data collection and remove frictions in the user experience in order to generate a “virtuous cycle”. As long as the total ecosystem generates profit, each element does not need to be profitable. If you are only competing in a single industry, chances are that you are competing with actors that are not trying to generate profit, but only remove frictions from their ecosystem or collect data.
Implication: The abundance of data will result in accurate underwriting and pricing. It will also result in schemes focused on prevention, such as health and fitness programs. Companiesacross sectors will need a technical ecosystem to support this new integrated way of doing business. Insurers could seize the
opportunity to become the orchestrators of ecosystems.

8. Increasing regionalization of state and financial power
Regionalization is occurring among states and within global finance. Regionalization in international relations stems from a combination of interests and power relations. The emergence of regional powers will drive the development of international relations towards 2030. This could lead to confrontation rather than cooperation, with increased volatility, competition over critical resources and the need for adjustments. Within finance, global cross-border lending has shrunk since the financial crisis, while there has been an increase in the number of lender-borrower connections within the same region, with financial services models custom-built to local conditions.
Implication: Regional powers will enforce increased regulation, not only for solvency and privacy but also for transparency. This will force a high level of standardization and price pressure on traditional covers.