Five Emerging Trends for the Insurance Industry

Over the past few months, I have delivered a number of insurance oriented keynotes and, later this week, I’ll be addressing a conference on Emerging Technologies for the insurance industry. While I cover a wide variety of trends in the information technology, biotechnology and nanotechnology sectors, here are five trends already impacting the insurance industry and which will only grow more prevalant over the coming years:

1. Genomics: Since 1998, the price of sequencing a base pair of genes has plummeted 100 million-fold. An individual can now have his or her genome sequenced for about $10,000. Obviosly, this still isn’t practical or affordable for the average person but the price will soon decrease to $1000 and then $100–and eventually even lower. The impact on human health will be profound and the implications for the insurance insurance–in terms of life expectancy alone–will be immense.

2. Gaming Dynamics: The ability for smartphones to monitor everything from a person’s heart rate and blood pressure to their glucose levels is impressive. To date, however, most of this data was just collected and then transferred wirelessly to healthcare providers who helped the patient make sense of it. This is about to change and gaming dynamics will lead the way by providing users new ways to engage, interact and, ultimately, control their own healthcare. Imagine, for example, receiving a lower insurance rate because you could verify that you exercised for 40 minutes and burned 400 calories. The potential for gaming dynamics to unleash new, innovative business models for the insurance industry is real.

3. Locational Intelligence & Pervasive Connectivity: Due to the exponential advancement of GPS technology and sensors, it is now possible to know a person’s location to within a few feet. While this has made it easier for the "directional-challenged" to find their friend’s house a little quick, the technology is poised to revolutionize the insurance industry by making it feasible to monitor a person’s driving habits. For instance, if a person is going too fast, braking too suddenly or driving or parking in a crime-ridden area, it’ll be possible to adjust that person’s insurance rates accordingly. Undoubtedly this raises significant privacy concerns which might ultimately doom the technology, but it is just as feasible that cost-conscious consumers will be willing to provide access to such information in return for lower rates.

4. Computational Analytics and Data Mining: When a mild earthquake hit Washington, DC this past August, the first Twitter report reached New York 40 seconds ahead of the quake’s shock waves. An impressive feat to be sure but it’ll pale in comparison to the type of information that will soon be delivered by data-mining Twitter and numerous other social networking sites. Officials at Southeastern Louisiana University recently reported they could track influenza outbreaks by collating the rise of Twitter texts from people complaining about flu symptoms. Other researchers have discovered there is a strong correlation between a person’s physical health and the health of their friends. One future possibility is that publically-available social network data can be data-mined by insurance companies to offer discounted rates to individuals who travel in healthier social circles. (Again privacy concerns and regulations may prevent such uses but, then again, maybe not.)

5. Hyper-Personalization: The foundation of the insurance industry is based on the idea of pooling risk. This strategy has worked well for centuries but in the not-to-distant future it is entirely possible that many individuals will prefer to be insured based on their individual actions–and not the statistical average of a large group. This is especially true if the person in question is healthier, a better and safer driver, and cost-conscious to the point that they aren’t concerned with sharing certain data with the insurance provider in return for securing a lower premium for themselves.

This future is coming. The only question is whether you, your business, your association or your industry is ready.

His latest book is Higher Unlearning: 39 Post-Requisite Lessons for Achieving a Successful Future.