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Progressively smarter: pervasive computing and high-speed wireless communications offer insurers near-term impact.

To paraphrase a recent insurance advertisement, the future comes at us fast and impacts us in unexpected ways. The challenge for insurance industry stakeholders is how to introduce the necessary changes to process, operations and business models that technology makes possible.

When exploring the future, many carriers follow existing trends and look for new ones across markets. Others make note of changes or improvements to familiar technology and try to imagine how extending such technology will provide them an advantage. What's hard to understand, and sometimes hard to accept, is that the changes that truly disrupt our traditional modes of operation often sneak up on us. In today's economic and competitive environment, it is more important than ever for insurers to balance the need for prudent risk management with an unwavering eye to the future of the industry in a changing world. The most disruptive technologies, and therefore those that are most likely to provide the biggest opportunity for the insurance industry, will result from developments outside of carriers' current predictive methodologies.

Some of the largest near-term impacts for the insurance industry will come from the combination of two distinct technologies. The first is pervasive computing (also called ubiquitous computing), which can be described broadly as the decentralization of computer processing power away from not only data centers but from the confines of what we traditionally call computers.

The second technology making an impact is high-speed wireless data communications over large geographic areas. High-speed means the ramping up of current low, single-digit megabits-per-second bandwidth systems to speeds that exceed 100 megabits per second. Networks developed for specific purposes, such as short-range systems, also will be measured in gigabits per second in the near term.

What changes will the convergence of pervasive devices and high-speed data networks portend for carriers? Ideas from the "better, faster" camp are fairly straightforward. Paradigm-changing ideas, however, include "Active Risk Management" policies that leverage remote yet connected sensor networks dedicated to risk mitigation when possible (think heat and smoke detectors with airborne particulate analysis) for homeowners' alerts to prevent claims, or, failing prevention, faster carrier response on a claim. Vehicle telematics could make use of smarter sensors such as next-generation, real-time traffic information systems that suggest mutes to reduce exposure to pollutants, noise and specific road conditions based on policyholders' requests.

Putting these two technologies together in an insurance context requires a little "cart before the horse" thinking from carriers. In today's world, it's generally true that technology and demographics easily lead the ability of business, and certainly the insurance industry, to an even pace--let alone get ahead of them. Consider recent market pacing activity by several carriers in the distribution servicing arena around Apple's iPhone. Despite the fact that various smart phones capable of pervasive insurance services have been around for several years, it took a convergence of interface, hip factor, some bandwidth and viral marketing to have leading carriers push the availability of useful applications to their policyholders. The fact that independent software vendors have been making similar capability available for some time was not enough.

In the end, having smarter technological capabilities will require equally inventive adoption strategies from the insurance industry as well.

Best's Review contributor Jaime Bisleer is global segment manager, nonlife, for IBM's Global Insurance Team. He can be reached at insight@ bestreview.com.
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Title Annotation:Technology: Technology Insight
Author:Bisker, Jaime
Publication:Best's Review
Geographic Code:1USA
Date:Sep 1, 2009
Words:554
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