“Imagine waking up tomorrow, and every item had its own IP address: the bathroom mirror, the wallpaper in the children’s room, the kitchen table, your seat on the train, your office window… what would your customers expect from you, what would your competition do and how would you react?” I am always surprised at how many people in the audience at my talks on future trends flinch when I ask that question – as if I had just hurled terrible news at them.
And yet, we are not talking about the coming centuries, but only about the year 2020. We have been heading for this situation for many years: as chip producers talk about fitting every single chip with an antenna, as computers get smaller and become an integral part of everyday objects, then every item turns into an internet receiver. iPad et al. are succeeded by iMirror, iTable and iWall. In the coming years, the internet as ultima ratio will gradually conquer every space and object of our daily routine. And they, in turn, will become intelligent: image analysis, image recognition and monitoring interfaces ensure that everyday objects monitor the behaviour of their users, complement these real-world data with virtual information and provide users with information tailored to their specific situation on 3D displays throughout their daily routine.
We consumers will use this information – or not. The decision is ultimately ours, and it is based on our individual needs: we use the technology if it helps us, but we switch it off when we wish to make it through the day with less “intelligence”.
No more standardised products for standardised customers
at standardised prices
The most important effect of these “intelligent” devices can be summed up in one phrase: the death of the masses. The phenomenon of the masses will be gradually disappearing from our society.
This means that there will not be a controllable mass of consumers anymore since their shopping lists have been compiled by individual electronic assistants. There will no longer be a “controllable” mass of viewers to send advertising messages to once TV programmes and newspapers are compiled individually. And if, instead of the purchasing manager at the supermarket, the electronic assistant on our mobile phones compiles the merchandise offer for us to choose from, then even brands with strong emotional attachment may find their brand equity eroding.
So what about the insurance industry? Imagine having an intelligent risk assistant on your mobile phone. It would be capable of analysing vast amounts of data in real time and would flag up risks as and when they occur. It could insert a red, yellow or green dot onto your glasses, depending on what risk area you are currently navigating this very second. How long would you be able to bear the sight of the red dot? At what point would you press the button on your mobile phone for the first time and take out additional insurance for the exact kind of risk you are being faced with at that very moment? It would probably only take you hours, or at most a day.
Does this sound odd? Perhaps, but only because these functionalities do not exist yet. However, they are being developed in sectors around us as we speak. So it will not be long until we see these offers in the insurance sector as well. And the added advantage: all this makes insurance “sexy”. Because suddenly it is not a necessary evil that we don’t really like, but rather the means by which customers can create their own individual comfort zone by shifting from red to green whenever they want.
People trust devices more than other people
This is nothing unusual, because we are already familiar with filter systems in our lives. We have always relied on information filters: teachers, editorial offices, estate agents, coaches, salespeople, travel guides, advisors. Their business model is based on the asymmetrical distribution of information. This means they have information sooner or in better quality and make their income by re-categorising that information and customising it for others.
But we will get used to technological filters outsmarting human ones. They yield better results. The digitalisation will enable anyone to access any kind of information at any time and still have it filtered for the data they want most. So even an amateur athlete can follow a professional training regime; every TV viewer can receive their individual programme, and every insurance customer can know more than their advisor.
Insurance companies: the disappearance of the standard segment
To us trend researchers, the insurance business is one of the most exciting sectors around. We are certain that it will undergo changes in the coming years that will dwarf the ones seen in other sectors. The reason is relatively simple: in the medium term, the former market pyramid with its clearly defined economy, standard and premium segments will transform into only two large market segments: the economy segment and the premium segment. The standard segment will disappear; the one segment in which most of us have generated the highest volume of business.
The most important future trend will be the fact that economy and premium segments will be working according to different sets of logic. While customers in the economy segment will continue to take their decisions on the basis of the trade-off of quality and price, and quality and price will be tested to the maximum within this segment, customers in the premium segment will gear their purchase decision not to quality or price, but to the suitability of the selected provider as an identity manager.
Insurers who want to strengthen their position in the economy segment have to link their processes and products with the logic of digitalisation. But here it will not be enough to just sell traditional products online. Rather, it will be crucial to merge digital logic and physical presence in a really intelligent manner.
Insurers wishing to stake a position in the premium segment will have to present themselves as an identity manager to their customers. This applies to brands, products, and themes as well as to advisors. It’s all about identity and the customers’ chance to express their own identity by buying a certain product from a certain insurance company or advisor.
Big opportunities: new uncertainty, adaptive products, and
“privacy by design”
At the same time insurers are looking at big opportunities in the future: according to our trend studies, new areas of uncertainty with substantial business potential have emerged in our society over the past few years. Customers feel new uncertainties in education, status, personal reputation, data and mobility. So far the range of products in this area has been rather limited.
Digital intelligent assistance systems offer another area of opportunity. They are individual and fit the customers’ mobile phones and their displays. On the basis of data analysis, they know the customers’ proclivities and the needs that drive them. In addition, based on situational data they also understand how user needs change over time. The recommendations made by the devices are not only tailormade, but also vary according to the specific situation. The combination of both is called adaptive. As a result, customers will find out that their digital assistant is providing them with significantly better suggestions than traditional salespeople. Eventually, customers won’t even trust their own research as much as the recommendations made by their digital assistants. Because their ideas are simply better! The economy segment of the year 2020 will be dominated by intelligent mobile phones, passive customers and adaptive offers.
The reliable processing of sensitive data will be a crucial factor of success. But this does not mean that there will be more data protection in general, or that the technological clock will be turned back. Rather, the insurers have the opportunity to react to this development by providing their products with different levels of privacy as early as in the design phase. While this principle of “privacy by design” requires a higher degree of input, it is at the same time a crucial distinctive feature of a high-quality product. In the future, data release will be omnipresent in standard products for the mass market. Other customers in the premium market, on the other hand, are prepared to pay the price to have more security and improved privacy. Products will therefore be conceptualised with four to five privacy levels. The basic level complies with statutory requirements, but these products will tend not to have any further limitations regarding privacy protection.
About the author
Sven Gábor Jánszky (43) is an innovative German trend researcher and director of the trend research institute “2b AHEAD ThinkTank”. For the past 15 years he has regularly organised meetings of 300 CEOs and heads of innovation from the German corporate sector. Under his direction, they develop scenarios of the future and strategic recommendations for the next decade.