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‘Identifying the Challenges of a Changing World’

Huw Evans blog

Why bother trying to predict the future? Hopefully this won’t be a question being asked by readers of ‘Identifying the Challenges of a Changing World which is being published by the ABI ahead of our Biennial Conference on July 9th. But looking beyond the immediate horizons which govern our lives is not a straightforward matter; our brains are wired to focus on present and near-term issues so the future can seem difficult to engage with.

Identifying the Challenges of a Changing World’ seeks to define how the world is likely to change between now and 2030, with a particular focus on what this may mean for the insurance industry. It identifies seven key trends including the digital revolution, global shifts in wealth & consumption, ageing societies and climate change as among the issues that will matter over the next two decades. With seven chapters and a total of 22,000 words, I hope it does justice to the issues themselves and the contributions of industry CEOs and leading think tank experts who generously gave of their time to ponder the future.

join the debate logoSo what did I learn? Firstly, how quickly the world is changing around us. Over the next 15 years, we will be part of the fastest-changing era in human history. Between now and 2025, the number of people able to live and consume beyond their most basic economic needs will exceed half of the world’s population for the first time. Geopolitical and economic power will rebalance decisively in a world where wealth and growth is more evenly shared between East and West. Underpinning and driving much of this change will be eye-watering technology-driven developments; by 2025 individuals will routinely have access to computing capacities 64 times that available today in a world where cloud computing, additive 3D printing and autonomous robotic devices are normal.  This alone raises big questions about the increasing volumes of data potentially available to insurers. Who owns this data, how is it protected and what will be the permissions for its use?

The more I thought about the scale and depth of these changes, the more it reinforced the central importance to insurers of understanding the future. Our industry, more than any other, reflects, manages and grapples with the risks posed by commercial activity, governmental & regulatory decisions and changes to how people live their lives. While we are effective in engaging and shaping much of our day to day interaction on many of these issues, our time horizon and sense of the future needs to run much further than the politicians, regulators and stakeholders we deal with.

Secondly, I was struck by the ongoing effects of the financial crisis of 2007-9, especially its lasting effect on public and economic policy. For the UK, being forced to live with shrinking public expenditure and tough finances for two parliamentary terms instead of one, means difficult decisions for whoever is in government cannot be put off about the size of the state, welfare reform and the potential economic exclusion of those at the bottom of society.

Finally, I came away with a sense that none of these challenges are insurmountable and the industry has a key role to play in all of them. This will require insurers to continue down the path of developing greater self-confidence and assertiveness in the value of the sector to society and its appetite to work constructively (but not uncritically) with governments and regulators to be part of the solution to many of the issues we will face (as well as constantly seeking to improve its current service to its present customers). This is not an easy option as the recent lengthy discussions with the UK Government over Flood Re demonstrated, but it will be increasingly important if the insurance industry is to shape the future we are beginning to explore.

Visit www.abi.org.uk/jointhedebate to have your say.

Last updated 29/06/2016