Philip Kewin
Remember Mike Tyson? There was a time when he was seen as unbeatable (and not just in his own mind). In his prime, he was a lethal destroyer of his opponents, generally within the first few rounds of a bout.
But then 42 to 1 outsider Buster Douglas came along. And when he least expected it, Tyson tasted defeat for the first time and so began a long slide into infamy then irrelevance. So what’s this got to do with disruption? Well, for all Iron Mike’s famous and infamous achievements, perhaps his best is this quote:
“Everyone has a plan ‘till they get punched in the mouth.”
Eleven simple words that sum up the forces of disruption perfectly.
It’s fast becoming obvious in today’s world that longevity and market dominance count for zero. And just like Mike, businesses are being blindsided because they didn’t know (or didn’t want to know) where the competition was coming from.
Market leadership is fleeting
For those businesses that do make it to the top, their time in the sun is shrinking. The average amount of time that leading companies spend in the S&P 500 has already shrunk from six decades to just 18 years. By 2027 it is expected to be down to 12, and three quarters of the current S&P 500 companies will have been replaced.
The same principles apply to businesses of all sizes – there is no such thing as a comfort zone.
The scrapheap gets bigger each day
We’ve all heard about the famous examples. Kodak, Blackberry, and Blockbuster
It’s a list that keeps growing every day, and one recent addition that caught my eye recently is Weight Watchers. Notwithstanding a recent spike because Oprah Winfrey lost 12 pounds, the share price has plunged by 95% since the launch of Fitbits and other digital fitness trackers three years ago. I bet the management team at Weight Watchers didn’t see that coming.
The traditional players in the market seem to have been blindsided too. Think about Uber, the world’s largest taxi company that owns no taxis. Airbnb, the world’s largest accommodation chain with no hotels or beds and Alibaba, the world’s most valuable retailer which holds no inventory.
It makes you think – who is your competition? Is it the person next to you? Is it an online insurer? Or is it a machine?
Computers are getting smarter and cheaper
First we need to take a look at the incredible growth in computing power. You may have heard about ‘Moore’s Law’, which talks about the rapid drop in the cost of computer memory and processing power.
But a more relevant way to look at computers now is their capacity to learn and think for themselves. This cognitive computing was once the stuff of science fiction but is now also getting cheaper and cheaper. We are talking about artificial intelligence, computers that can understand natural language, can learn from unstructured data, make decisions and think for themselves.
At the moment $1,000 gets you artificial intelligence equivalent to the brain of a mouse. But within two – three decades, $1,000 will buy the cognitive computing power equivalent to the brains of the entire human population. And that truly is something to think about!
Automation will affect everything
Now you have all heard about the self-driving car. No longer reserved for the Hollywood sci-fi blockbusters, it is actually a lot closer than you think. In fact Zurich recently co-sponsored a trial of self-driving cars in Adelaide late last year.
A recent report by KPMG has suggested that as a result of driverless cars not crashing as much, and being harder to damage and steal, the personal car insurance market could shrink by more than40%, which has a lot of industry insiders worried I can tell you.
So what about life insurance?
Could the same thing happen to life insurance? What’s our driverless car? Well, as I mentioned earlier, the exponential growth in computing power and artificial intelligence will give us the means to solve problems quicker than ever before.
You may have heard about IBM’s Watson, which has been described as a “cognitive system enabling a new partnership between people and computers.” In simple terms, it is a technology that understands language and can learn. Watson is expert in analysing unstructured data, which quite staggeringly is about 80% of the data in the world.
The ramifications of this type of machine learning are huge. If we look at the field of medicine and something as big as cancer, Watson has not only been proved to be more reliable at diagnosing cancer, it has also cut the time to create a genome-based treatment program from four years to just 10 months.
There is no doubt that this sort of intelligence will soon see us cure cancer and countless other diseases. It will turn healthcare on its head. Previously unthinkable longevity milestones are already looming. The average child born within the next generation is now expected to live for more than a century.
What will this mean for the role of life insurance in the future?
Embrace the unknown
While this explosion in technology and data will undoubtedly make customer intimacy and contextual offers even easier, the question remains whether you see it as a threat in the way it aids automation, or will you focus on the opportunity to know more about your clients than you ever thought possible? Further still, what will that do to your ability to serve them better?
Whilst the future is uncertain –we do know we are in for one hell of a ride, and it will be those who embrace the new who continue to survive and thrive.
By Phil Kewin, General Manager, Life & Investments
——–
