Atlas Magazine July 2017

Loss of rationality

At a time when digital transformation is playing out in full swing, Swiss Re has come up with a study dedicated to new emerging risks. In a surprising move, loss of rationality appears to stand among the threats that the insurance business has to reckon with for the next three years.
Atlas Magazine N 143, July 2017 Click to download
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Today, no one is under any illusion! Digital revolution is about to sweep away a large number of players on the market. All cards are lowered. Insurers, reinsurers, intermediaries, service providers, the entire chain is under threat. Insurance professions are also undergoing profound transformations: risk evaluation, distribution, management, customer knowledge are evolving at the same pace as the new IT applications. In Japan, a country at the top of cutting edge technology, some insurers have already started introducing robots in their services.

Whether insurers like it or not, the transformation process is nowhere near stopping. Artificial intelligence will soon take over, widening the gap between “modernists” and “wait-and-see advocates”.
Paradoxically, surviving the digital tsunami or disappearing is no longer the only concern insurers are up against. The “internet culture” stands as a real threat that undermines the foundation of the insurance industry.

Insurance does rest on a rational and common approach to risks and on the mutual trust between both partners: insured and insurers. Unfortunately, the internet tool has undermined this trust-based relationship. The web, main source of information for the insured, has become a battle field where false news, misinformation, manipulation, intoxication, false blogs are manipulating customers who may be driven to overstate or understate risks according to the lobbies’ interests. Likewise, insurers’ reputation may be compromised by malicious cybernauts.

In fact, this period of time we are going through can only encourage extreme trends whereby insurers’ growing rationality clashes with the insured’s growing irrationality. It contrasts science and emotion,knowledge and beliefs.

Atlas Magazine N°143, July 2017

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