Looking into the Crystal Ball

Are you interested in knowing the future? Who wouldn’t, the more accurate, the better. (Next week’s winning lottery numbers, anyone?)

Christian Bieck, Insurance Research Director, IBM Institute for Business Value

Unfortunately, as the old Danish proverb goes, “Prediction is very difficult, especially about the future.” Christian Bieck, the Insurance Research Director at the IBM Institute for Business Value, and his co-author Mark McLaughlin, IBM’s Global Insurance Director, gave it a shot anyhow.

In this interview, Christian Bieck describes the latest IBM Institute for Business Value insurance study “Insurance 2025 – Reducing risk in an uncertain future”.

The basis of Insurance 2025 are two technological trends, which the authors believe will strongly impact the future across industries: cognitive computing, and decentralisation of decision making.

From there they describe four alternative future scenarios with different views of risk and insurance needs – swarm economy, central intelligence, Internet of Everything and survival of the fastest.

In swarm economy, for example, cognitive systems are ubiquitous and treated as utilities, with decision making “on the edge” in smart devices. What does such a scenario mean for insurers? When risk can not only be measured but also mitigated or prevented on the edge, classical insurance might well become as good as obsolete. Insurance will switch to micro-products offering remediation and repair.

On the other end of the spectrum, survival of the fastest, cognitive is proprietary, and edge computing hasn’t gained hold, be it because of (privacy) regulation, customer sentiment, or technological difficulties, such as a lack of standards. This is where we are today, but with a twist: technology, especially cognitive, will have advanced in such a way that early adopters – “the fastest” of the scenario name – will have gained a huge competitive advantage.

While insurers would probably prefer the latter scenario, as it has the potentially highest profit, competitive pressure might well move the industry toward the former.

What will it be? The authors do not make that prediction, but they do describe what insurers can do to be prepared:

  • Build a war chest
  • Prepare partner ecosystems
  • Build high-beam headlights
  • Embrace innovation

In the interview, Christian Bieck goes into more detail on each of the four scenarios, showing through examples how the future could look.


If you are interested in reading the full study, it is available for free download here.

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