The insurance sector plays a critical role in our economies and societies, by offering protection that enables us to take risks we otherwise wouldn’t. As technology enters an innovation supercycle, how can foresight help the insurance sector maximise its ability to anticipate and assess risk?

Looking back to look forward

I began my career working in the insurance industry at the Association of British Insurers in the UK. One of the first research reports I worked on was on modelling the economic value of the insurance sector for the UK economy. There were areas to assess such as how many jobs it creates, but the most captivating impact to my young mind was how it can drive and enable innovation.

Back then, the focus was on traditional issues like savings, climate change, pensions, and demographic shifts. These were the key topics I was researching, and the ones we used to prepare conferences around, reflecting the concerns of both the industry and society at large.

Technology was present but wasn’t the disruptive force it is today.

Fast forward to today, and technology is no longer a background player but a driving force in the insurance sector.

As I look ahead, I can see that the future of insurance will be shaped by an entirely new set of risks—risks brought on by rapid technological advancements and their intersection with climate, demographic and geopolitical dimensions. Insurance companies that want to thrive, will have to innovate and adapt to meet these emerging challenges, or risk being left behind.

Emerging Technological Risks

Here is an overview of the emerging risks that I am seeing for the industry, based on my research and conversations with clients.

It is by no means an exhaustive or comprehensive list, and I’ve purposefully chosen some that may appear on the edges, as I believe that’s where most of our blind-spots are.

1. Humanoid Robotics: From industrial to service based sectors

As humanoid robotics technology advances, it introduces a new spectrum of risks for the insurance industry to consider.

These robots, designed to perform tasks traditionally carried out by humans, are increasingly being deployed in industries like healthcare and retail, and potentially our homes. While their use presents efficiency and productivity gains, it also brings about unique liability challenges.

For example, who is held accountable when a humanoid robot makes a mistake?

Insurers will need to develop new policies to address robotic malfunction, human injury, and property damage resulting from interactions with these machines.

Moreover, the potential for cybersecurity risks linked to hacking or AI-driven errors in robotic systems adds complexity to underwriting these products.

As humanoid robotics become more integrated into daily life and business operations, insurance companies must innovate to cover the liabilities of this emerging field, ensuring that policies can adapt to the rapidly changing technological landscape.

2. Neurotechnology: From medical to consumer applications

Neurotechnology, which includes brain-computer interfaces (BCIs) and devices designed to monitor or alter neural activity, is another emerging frontier with profound implications for the insurance industry. Companies like Neuralink and Synchron are breaking the limits of what we thought possible. Innovation in this space can appear far into the future. Yet they might be closer to being mainstream than we imagine.

In one of my earlier blogs, I wrote about Synchron linking their BCI to chatGPT, enabling the individual testing it to control the tool with their thoughts.

As this technology progresses, especially in healthcare and consumer applications, new risks are beginning to surface.

Neurotech devices could lead to medical complications, raising questions about liability in cases of malfunction or misuse. For example, if a brain implant used to treat neurological disorders causes unintended cognitive or emotional side effects, who is responsible for the damages—the manufacturer, the healthcare provider, or the technology operator?

Furthermore, privacy concerns arise with the possibility of hacking brain data or manipulating neural signals, presenting unprecedented cybersecurity risks. Insurers will need to develop coverage that addresses the physical, mental, and data-related risks associated with neurotechnology.

3. AI, deepfakes and synthetic data: Opportunity or Liability

AI has the potential to revolutionize the insurance industry, automating underwriting, claims processing, and customer service. For example, McKinsey estimates that AI will “increase productivity in insurance processes and reduce operational expenses by up to 40% by 2030”.

Insurtech startups like Lemonade have embraced AI to streamline their operations, using it to handle claims and customer service.

However, the use of AI in our day to day also introduces risks such as algorithmic bias, liability for AI decisions, and errors in automated processes.

In addition, the rise of deepfake technology, where AI is used to create highly realistic fake videos or audio recordings, presents a significant challenge to companies worldwide.

Earlier in 2024, the head of fraud at Zurich Insurance, Scott Clayton, Zurich was seeing more and more claims that have been manipulated with shallowfake technology.

"This is becoming one of the most emerging threats from a counter fraud point of view."

Synthetic data is another area that is bringing both new opportunity and new risks for the sector.

Humana, the third largest health insurance provider in the US published a synthetic data exchange platform. The aim is to unleash new insights and bring advanced products to the market. The data exchange offers access to synthetic patient data with a total of 1 500 000 synthetic records that is representative of Humana’s member population.

How strategic foresight can help C-suite executives in the insurance sector respond to these trends

Early in 2024, the CEO of Aon, Greg Case, gave an interview to the Financial Times, where he called on the industry to develop forward-looking models that better understand the risk and so improve the supply of insurance.

He said:

“The industry traditionally reflects history as a way to predict the future. It’s not enough in the context of climate, or cyber or generative AI.”

In an industry as complex and risk-driven as insurance, the ability to foresee and respond to emerging trends is crucial for long-term success. Strategic foresight enables the C-suite to navigate the shifting landscape, helping to prioritize focus, balance immediate needs with long-term strategy, and improve risk anticipation.

Here are 3 ways it can do that.

1. Prioritizing Critical Trends and Opportunities

   The insurance landscape is shaped by a wide range of trends—technological, regulatory, environmental, and societal.

   One of the biggest challenges for the C-suite is determining which trends to focus on now and which to monitor for the future.

   Strategic foresight provides tools like trend analysis and scenario planning, allowing executives to assess the impact and urgency of different trends.

   By systematically exploring future possibilities, foresight helps executives decide where to invest resources. It ensures that the company doesn’t overlook crucial long-term opportunities, such as AI governance or sustainability-linked products, while still addressing immediate market demands.

2. Balancing Immediate Pressures with Long-Term Vision

   The C-suite often faces a tension between managing short-term operational demands and preparing for long-term industry shifts.

   Strategic foresight helps executives maintain this balance by ensuring they are not overly focused on the immediate time horizon at the expense of missing key future trends.

   It offers a structured way to anticipate future disruptions while still addressing current priorities.

   Foresight enables the C-suite to adopt a more proactive, anticipatory mindset, identifying the emerging risks and opportunities that could impact the company in the next 5, 10, or 20 years. This helps avoid the pitfall of only reacting to market changes, ensuring that companies are strategically prepared for upcoming shifts.

   For example, a CFO might use foresight to begin planning for future climate-related insurance liabilities, while still ensuring the company meets current regulatory requirements.

3. Enhancing Risk Anticipation and Innovation

   Insurance companies are inherently forward-looking, with their success tied to the ability to anticipate and price future risks accurately.

   Strategic foresight is a natural fit for the industry, enabling insurers to not only understand emerging risks—such as AI-driven fraud or climate-related events—but also to innovate in response to those risks.

   Foresight helps improve risk anticipation by combining historical data with future-oriented insights.

   This equips executives to build more resilient risk models and develop innovative products that address future customer needs. Insurers can use foresight to shape products that tackle long-term challenges like autonomous vehicle liability, deepfake fraud, or climate change impacts.

   For example, reinsurers such as Munich Re, are using foresight tools to not only raise awareness of technology trends among their clients, but also using those insights to shape their Munich Re Ventures portfolio, with the aim of “funding the future of risk for the human endeavour”.

What next?

The future of insurance will be shaped by an entirely new set of risks—risks brought on by rapid technological advancements and their intersection with climate, demographic and geopolitical dimensions. Insurance companies that want to thrive, will have to innovate and adapt to meet these emerging challenges, or risk being left behind.

If you’d like to discuss the ‘so-what’ of these trends for your organization, drop me a line at athena@athenapeppes.com or book a call.