The Future is Flexible in the World of 4IR

Previous industrial revolutions had a profound impact on the world. The innovators of the time introduced mechanisation, electrification and mass production, information technology and the knowledge economy.

There is a school of thought that says we are now we are on the brink of the next industrial revolution. This new era, however, will combine electronics, machine learning, data and communications in ways that we can’t fully comprehend but of one thing I am certain: for companies and individuals the future is flexible.

This revolution will lead to massive disruption to the industry leaders, and companies that were thought untouchable will be disrupted. Some companies will disappear because of the new way of working.

What we can do is read some the signs and signals and project some of those into the next 5 years to predict what the 4th industrial revolution (4IR) might mean.

Machine learning

The power of machine learning allows us to observe the world and act, something we’re already seeing in semi-autonomous vehicles. This is something that is already having an impact on the insurance sector, particularly in liability insurance.
Machine learning and artificial intelligence (AI) will become an increasing part of business in 4IR. There are already signs of this with IBM’s Watson.

AI and machine learning will replace roles and tasks that previously could only be done by a person. The opportunity for insurers is to take advantage of these developments, with the most successful being those who can use these new tools to further magnify the efficiency and capability of their people and resources.

Changes in working practices

In today’s gig economy thousands of people are working for themselves utilising their skills for a company that they only know on their computer or smartphone, for example Uber, Lyft, or perhaps TaskRabbit.

At first we thought that it would be the lower paid jobs that would be disrupted. Higher paid roles in software development, however, are also being disrupted using services such as Upwork. Innovation long considered something that could only be done by an organisation’s research and development department can be treated in the same way with services such as FreshMinds.
How does business adapt and take advantage of this new way of working? A company that is transitioning to a 4IR company knows that it must look at using fractional services (expertise provided on flex-up and flex-down basis) as well as using the services that the gig-economy offers.

Changes in services and products

People and the organisations that they employ are starting to want to buy services in a far more flexible way. They want to be able to turn an insurance product on when they need it, not be paying for it all the time. To enable this requires changes in computer systems and business process. Smart sensors and devices that are connected to the can now detect that the vehicle is being driven and implement the “Vehicle in motion cover”, or detect that the vehicle has been parked for the evening, which means that the cover should be changed accordingly.

Start-up companies and disruption

Now that the cost of international data communications is almost free, companies today have no need to consider themselves tied to one location or geography. This changes the nature and the outlook of companies, and enables them to think and strategize disruptive services in a way that hasn’t been possible before.

How to survive an industrial revolution

It is not always the strongest that survive, it is those that can adapt to their environment. For the insurance industry, this is going to mean innovating and accepting change. Those organisations that either don’t see the changes coming, or who resist the change are likely to become the earliest casualties of the fourth industrial revolution.

4IR in 2019

A 2019 report explains that there are numerous points of entry: redefiners, for instance, are working to change their core business models to redefine their businesses. Industry explorers, meanwhile are breaking new ground in new markets or sectors.

The implications for a market such as Lloyd’s of London, which has experienced recent turbulence is that a loss making environment could tempt some companies to cut costs in traditional ways that could prevent realising the growth they need. But now is the time to embrace 4IR to help create efficiencies in operations and new revenue-generating 4IR-related products and services.

Analysis reveals that nearly US$650 billion of 4IR technology investments have been made in the U.S. since 2012. However, the benefits of 4IR tech will likely be exploited by companies that move beyond focusing on immediate results and enter a transformational state of mind, which means investing in new skills.

The question is that as demand for employees with the right skills peaks, how will you attract the right people, while upskilling existing employees? New technology is key to transformation but it has to be led by cultural change that fully embraces the new challenges and opportunities that comes with the world of 4IR.

In summary

We live in interesting, revolutionary times. The tools of this revolution such as the internet of things (IOT), machine learning and artificial intelligence (AI), have the power to collect more data, discover new information, and magnify the capability and efficiency of global resources in new ways.

Insurance companies in this Brave New World will need to see and read the signs, and the ability to efficiently innovate and implement change effectively.