Industry Insights

Looking into the crystal ball

Share this post:

Are you interested in knowing the future? I certainly would, the more accurate, the better. (Next week’s winning lottery numbers, anyone?)

Unfortunately, as the old Danish proverb goes, “Prediction is very difficult, especially about the future.” My colleague Mark McLaughlin and I gave it a shot anyhow, and you can now read the result in our latest IBM Institute for Business Value study “Insurance 2025 – Reducing risk in an uncertain future”.

In this study, we start with two technological trends, which we think will strongly impact the future across industries: cognitive computing, and decentralization of decision making.

From there we 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? Well, 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 microproducts 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. (Think 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 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 – creating a real prisoners’ dilemma.

What will it be? We don’t know, but we have a few ideas of what insurers can do to be prepared:

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

Did I pique your interest? If yes, please download the study at

Insurance Leader, IBM Institute for Business Value

More Industry Insights stories

How can insurers stay relevant when insurance ceases to be mandatory?

Insurance and insurers have been around for millennia, with modern insurance starting in the U.K. more than 300 years ago. For much of this time, incumbent insurers have been protected from competition by four big barriers: regulation, the law of large numbers, the trust nature of insurance, and, last but not least, the inertia of […]

Continue reading

Connect with IBM Insurance experts on social media

At IBM, we are fortunate to have a number of IBM Insurance experts who are active on social media and enthusiastically look forward to connecting with others in this realm. I encourage you to connect with the following insurance experts if you have a question or just want to follow the latest news and trends […]

Continue reading

How digitalization of life insurance will transform a static industry

Life insurers have a big problem: Younger adults are not buying life insurance. Despite year-over-year population and GDP growth, the number of U.S. residents under 45 who applied for life insurance in 2018 fell 2.7 percent from the previous year, according to the nonprofit group MIB. Insurers have turned to emerging markets such as India […]

Continue reading