AI WILL SHAKE UP HOW RISKS ARE COVERED

THE FOURTH Industrial Revolution is beginning to shape how businesses function and leaders need to examine how society and business should fundamentally and structurally adapt in line with today’s vastly changed world.

The reality is that society is facing more risks today than a few years ago, from security of information to the impact of artificial intelligence (AI) – aka the intelligence shown by machines – on jobs.

It would be reckless for any business not to watch these trends and developments very closely. Over the coming years, the innovationdriven economy will continue to fuel fast-paced change and technological disruption.

Every sector – health, communication, production, transportation, insurance – will not only be impacted but will be transformed. This will have huge implications for insurers globally.

Taking health care as an example, CIO.com reports that “the AI market is set to experience a compound annual growth rate of 40 percent through 2021, largely because AI has the potential to improve health care outcomes by 30 to 40 percent while cutting the costs of treatment in half”. The implications for medical aid and health insurance will be fundamental.

And according to prescouter.com, “the use of AI to predict the paths of pedestrians and cyclists will decrease traffic accidents and injuries”. If this is true, it would have a major impact on car insurance underwriting.

So as AI and automation continue to advance, the insurance industry is developing new ways to assess and underwrite risk. There is so much to consider and define for insurers. Many of our typical claims of today will change going into the future. For example:

◆ Who is responsible when a self-driving car accidentally injures someone?

◆ If surgery is performed by a robot, how will medical insurance change?

◆ How many jobs will be reduced by automation and how many new jobs and skills will be created by these new technologies?

◆ How dramatically will workplace risks change as a consequence?

The World Economic Forum will also be looking closely at climate change as unpredictable weather patterns and an increase in catastrophes continue to wreak havoc globally. Insurers play a crucial role in rehabilitating communities after a disaster.

Going forward, we'll continue to focus on how to predict and proactively mitigate risks synonymous with weather events.

For South Africa, 2019 is a pivotal year. The general election will set the tone for the next few years politically but also, crucially, economically. Insurance has a huge role to play in transforming any economy by protecting citizens and businesses from major financial risks. As such, we will be working hard alongside government and other stakeholders to bring about meaningful reforms to invigorate economic growth and ensure insurance is more inclusive going forward.

So while local insurers will dedicate a lot of their time to pivoting into the fourth industrial revolution, we will also expect a landmark year in terms of our country’s future as we help businesses and consumers.

Lizé Lambrechts is the chief executive of Santam.