Insurance in the home in 2028

January 11, 2018

If we could step into a time machine and go forward to the year 2028, what would we find? Given the pace of innovation in the MENA region it seems likely we’d find Hyperloop, flying taxi’s and crops being monitored by drones. The roads would have autonomous vehicles, many of them electrically powered and the cities would be far smarter using data to improve life for everyday citizens. But what would all this mean for Insurance?

Before we talk about the future, lets recap on what’s happening in the region today. According to the World Bank the population of the MENA region is approximately 437 million people. The median age of that population is variously given as between 28 and 31 years old (depending on the source) and the Qatar Financial Centre MENA Insurance report puts insurance penetration at 1.5% less than a quarter of the global average. We have a young population capable of driving GDP growth and innovation but who aren’t buying insurance products.

Below is the first of a series of articles that look at what a day in 2028 might look like and what that will mean for insurance.

Firstly, a prediction; insurance penetration will rise considerably in the next 10 years. InsurTech is still nascent in the region but is growing and firms from outside of MENA are also looking to invest in this dynamic market. Local firms such as Bayzat and Democrance are leading the way and driving the conversation.

Hopefully all of this sets the scene but when I wake up in the morning in 2028 what do I find?

I wake up to my AI assistant playing some music from my morning playlist, she’s linked up to my watch which monitors my heart beat and sleeping cycle so that when the alarm sounds it’s a gentle experience rather than a jolt. As she senses me becoming fully awake she tells me the precise time and what’s on my calendar for the day. I get up and take a shower and get ready for work.

The music follows me through the house as I make breakfast. I realise I’ve run out of Orange juice, luckily my fridge knew this yesterday and a drone has delivered a fresh carton to a refrigerated storage unit on my balcony. My shirts and suit are freshly laundered on an automated schedule and delivered to my flat with no intervention from me and my account charged for the service.

As I eat breakfast and I read, my AI assistant has scoured various news sites to pull together a personalised list of articles for me to read. There’s articles on FinTech, the bigger headlines of the days world news and an update on the Ashes cricket, who knows in 2028 England might stand a chance! As I walked out of the door the lock registers me moving more than 10 metres from the door and secures itself and arms my home alarm system.

So that’s the first hour of my day, it might sound farfetched but the technology I mention here is all either available or being tested, the reality ten years from now is likely to be well beyond this. What would a morning routine like this mean for insurers?

My wake up is linked to a watch that monitors my heart rate and sleeping patterns. This type of wearable, which monitors health indicators, is increasingly common, with firms like Cigna already running pilots to reduce premiums and provide incentives that reward healthy behaviours.

This gamification has been happening for years, at BP for example they distributed over 14,000 Fitbits in 2013 allowing employees who hit a certain number of steps access to lower premiums. This has evolved over the last few years with UnitedHealthcare announcing this month that it will allow customers to use a Samsung Gear or Garmin watches to track their steps and earn up to $1,000 per year off premiums.

As the sensitivity of these sensors improves a whole range of additional factors will be trackable and insurers will be able to pre-emptively suggest consultation and maybe even preventative treatment. This will reduce claims and the additional data will allow insurers to price risk more accurately.

The sensors in my fridge that know I’m out of Orange juice, and those in my oven, boiler, toaster, doors and windows will also allow the insurance company to monitor the premises for any signs that something could be amiss. Again, this data will allow firms to better price risk and prevent issues before they arise. In worse a case scenario, they can contact emergency services if necessary.

Insurer Neos launched earlier this year and provides eight wireless smart home devices that detect intruders, fires and leaks, plus wireless indoor HD 1080p cameras. All of this links to an app and an emergency assistance team who can come and fix problems. This is similar to my self-arming alarm system in 2028.

What insurance would the manufactures of the IoT enabled devices require? I asked InsurTech expert and Abu Dhabi Innovation Challenge Mentor, Nameer Khan, who told me: “Our current challenges will be reduced, but emerging risks will escalate. Emerging risks like privacy, cyber hacking, data leaks. So, in the future, we will have specialised cyber insurance for each type of IoT product like vehicles, white goods etc. IoT is projected at $16 trillion and will permeate everything so a there won’t be a simple ‘all-in-one’ IoT policy but several specialised ones.”

What about the drone that delivers my automatically ordered juice? As the skies become more crowded authorities from U.S Federal Aviation Administration to the RTA in Dubai are working on regulating drones and companies are trialling everything from drone delivered pizza, Dominos, to the autonomous flying taxis being trialled in the UAE. But what happens when drones go wrong? Who needs to be insured and for what? Manufacturers, operators and third parties may all want to manage their risk and take out cover.

This is especially true with autonomous drones where the potential for large numbers to be in limited air space may increase the chances of collision or interference. Issues could involve damage to infrastructure such as power lines, personal injury, damage to property, medical care, invasion of privacy. These are risks that individuals and firms are likely to want to manage and mitigate through new forms of insurance. We’ll talk more about this in the next article which will cover the daily commute in 2028.