Robots and the nature of risk

Facebook buys Oculus, a manufacturer of VR headsets. Google buys Nest (connected thermostats) and Boston Dynamics (autonomous robots). Amazon and DHL are developing drones for delivery.

What do all of these things have in common?

All of these companies are placing big bets on technologies for a connected world; technologies that need a lot of data to work and that are or have the potential to be autonomous.

Are you excited by these developments or worried? My own view isn’t quite clear yet, “it depends” (on actual usage, regulation, …). From an insurance perspective, I think it’s a good thing, as it forces the industry to (re)think some fundamentals.

In innovation presentations, I tend to start with the question “in 2020, will cars need insurance?” If cars are connected and not only drive themselves but communicate to avoid hazards, determine right-of-way and keep an optimal distance from each other, thereby completely eliminating traffic jams, what would be left for an insurer to cover?

Residual risks will always be around (no technology is failsafe, and there is always the human factor), but will this be enough to support more than 10,000 insurers globally? If the risks that we have been covering in the past become less relevant, what new risks will crop up? I think that many of the risks we will be covering will be less around things and more around persons. For example, identity theft was little heard of 30 years ago, now it has become a real problem (and risk).

Of course the original risks won’t disappear, they will simply be strongly mitigated by smart technology. Leading insurers will use their understanding of risk to mitigate them even further, providing risk mitigation as a service.

But what new risks will there be?