The world is undergoing a pace of change unlike anything that we’ve experienced in history. Most of that change is technological, but the technology is driving cultural change as well. Not much more than 100 years ago news could take months or years to reach people far from the event, it now takes only seconds. When I was a senior in high-school, the evening news was appointment viewing to find out what was going on in Iraq. Today, I can find out what’s going on in any conflict area at any time with the mobile phone on my desk.
All of these changes mean that we need to have a complete understanding of risk if we’re going to be to able to serve people as insurance professionals. It is no longer acceptable (if it ever really was) to simply sell a customer a stack of policies and send them on their merry way. If we aren’t providing more service than just taking the order, asking if they want fries with that, or if they need us to supersize their policies, we aren’t serving them properly.
One way that we serve insurance consumers is by understanding the evolving, yet unchanging nature of risk, especially the risks associated with their worlds, whether we’re talking about individuals, families, businesses, or other organizations. Wait, how did we get to risk and how can risk be evolving, but unchanging?
All of this technological change has created new risks that we didn’t consider, even as late as my entrance into the insurance world, less than 20 years ago. When I first got into insurance, the closest most of us were to autonomous vehicles was the cruise control we used to make sure that we didn’t end up with speeding tickets. People were using smartphones, but not that many of them and only to make calls, send texts, and keep track of their calendars and email mostly. As life around us changes, the risks that we deal with change (and stay the same).
The evolving nature of risk
Mass casualty events appear to be increasing, whether you’re thinking about shootings in public places, or domestic and foreign terrorism, the world appears to be less safe than it was a generation ago. Recent events ranging from the Las Vegas mass shooting, to school shootings, to church shootings, to the Boston Marathon bombing underscore the fact that we don’t remember this volume of events like this in the past.
When Hurricane Harvey dumped more than 50 inches of rain on the city in five days, the flooding was historic. Whatever your stand on climate change, you must admit that there are more floods occurring today than before. The old hazard flood maps are out of date. Consider that there are more factors than elevation and distance to bodies of water that affect flood potential. The pact of construction in many areas and insufficient ability to move large volumes of water away from structures and streets makes the possibility of a flood higher in many areas.
Vehicles are driving themselves with varying degrees of autonomy. Many states have active tests going on with vehicles driving themselves. Recently, an autonomous vehicle, driving itself, with a human pilot in the vehicle, hit and killed a pedestrian crossing the street legally in front of it. This is not the only autonomous vehicle on the streets of any state. As a matter of fact, there are vehicles with a certain level of autonomy driving all around us. Deliver vehicles (including taxis) will soon become more automated.
The list goes on and on. We could go into the several cyberspace related risks that have arisen over the last five years. You get it and you’ve probably already thought of a few different new risks that we haven’t mentioned. As insurance and risk management professionals, we must consider many of these exposures as relevant to the lives of our customers.
The unchanging nature of risk
With all of those new risks (and a pile of them that we haven’t thought of yet), how can we say that there is an unchanging side to risk? With all of these risks, there are only so many things at risk.
With autonomous vehicles on the road, the risk is still bodily injury or property damage. If your customer is operating a vehicle in some sort of autonomous mode, that customer’s money is at risk if that vehicle causes bodily injury or property damage.
A ransomware attack for a customer puts their data and potentially their ability to conduct their business at risk.
Changes in flood characteristics around certain areas means that there is still a risk of bodily injury or property damage.
Businesses sell products differently than they used to. It used to be that a store was a place that you went to pick up a physical product and pay for it with cash in front of an actual person. Today, a store can be a webpage where you see a picture of a product, click to order, click to link your PayPal account, and have it shipped to you. The seller doesn’t even have the product. They take your order and your money and pay someone else to create what you just bought and send it to you for them. The risks involved are still the money transacted between the customer and the seller.
At their core, all of the new risks are really new ways to risk the same damages. Whether it’s bodily injury, property damage, personal and advertising injury, or theft, these potential losses need to be dealt with. Sure, the policies look different and the application of risk management techniques is different. But in the end, we’re trying to find ways to help people to protect what is important to them.