2030: Will Insurance Re-Route Us?

A brief exploration of how technology might challenge our ability to discover beauty.

By Adriana Nugter and Shannon Mullen O’Keefe

Imagine this.

Eight years from now, 2030 to be exact–we’re planning a vacation. A road trip, to be precise. We’re not in a hurry, and thus we intend to take as many scenic routes as possible. You’ll find us on the windy roads through the mountains and on the deserted desert roads, too. You’ll probably also see us on coastal highways. Ready to take in all the beauty nature reserves for us.

We want to see the most beautiful places. We want our trip to be a trip of discovery and exploration.?

One of those epic trips of a lifetime.

Everything is looking great, until we remember that in this future world, we are now billed for our car insurance by the route we choose to take. It turns out that our scenic roads cost a lot more per mile than the six-lane alternative would.

What has changed?

Let’s get specific about how the insurance industry maps their path to 2030.

In a McKinsey article entitled “Insurance 2030–The Impact of AI on the Future of Insurance,” McKinsey analysts walk us through a future in which our personal assistants will map out our routes in advance of our travel, share it with our mobility insurer, with the latter immediately responding with alternate routes that have much lower likelihoods of accidents and car damage.?

Back to our trip. We are informed that our choice of route will incur our mobility insurance premium to increase by, say, 4 to 8 percent, based on the volume and distribution of other cars on that particular road on that day, on that time of the day, to be even more precise. Lucky for us, it is a sunny day, so no additional cost because of slippery routes and less visibility. Whatever route we decide to take, the extra amount will be automatically debited, at and on the spot, the moment we hit the road.

In insurer’s language: ‘Highly dynamic, usage-based insurance (UBI) products proliferate and are tailored to the behavior of individual consumers. Insurance transitions from a “purchase and annual renewal” model to a continuous cycle, as product offerings constantly adapt to an individual’s behavioral patterns’.

Translated into human language: in the future — we’ll pay for those scenic routes, if we choose to take them.

Suddenly, our epic trip is looking less epic. We’re not fancy people (yet?). The plan was to get our old VW bus, and do one of those types of trips. The romantic kind (on a budget). It dawns on us that the premium most likely will be even higher, as the latest lane correction system is not part of our bus’s mechanical capabilities.

It seems romance is a riskier business.

Erg. The less costly routes seem a lot less interesting. We must choose between efficiency and romance. Between risk and the beauty of discovery. Maybe we won’t take that trip after all.?

Beauty just doesn’t look available to us, honestly.

Re-routing our futures: who is in the driver’s seat?

A future in which we’re re-routed by costs isn’t very far off. By 2030 it seems reasonable this could be the case.

To start with, we leave our data everywhere. It’s up for grabs right now. It’s like we have fairy dust on us and we sprinkle it pretty much everywhere we go. We live busy and distracted lives, many of us. We click boxes all the time. We do it without even realizing it. We mindlessly ‘opt-in,’ or give our permission for its use. It may even be mandatory to, for example, share geolocations when taking out car insurance.

Each time we connect, we leave a little dust behind: stories of our human behavior, of our actions. So it’s not hard for insurers to predict and personalize our risk profile. Suddenly, dust turns into dollars. Instantly. A gigantic shift from insuring based on the past, to insuring ‘in real time’ and usage based.

The standard approach will be to have algorithms process all data streams deemed necessary, generating ‘active’ insurance products, adapting to the world around them, adapting to us, thus enabling new product categories.

So far, we have been talking about cars. But what happens when we bring wearables into the mix? Will our armband be caught tipping off the insurance gurus when we nibble on a sugar cookie every now and then? How about usage-based insurance for smart kitchenware? Or, as already is the case, medical insurance based on the number of steps we walk per day?

As McKinsey puts it: ‘Pricing is available in real time based on usage and a dynamic, data-rich assessment of risk, empowering consumers to make decisions about how their actions influence coverage, insurability, and pricing’. And indeed, it may well be that if we were taking a look ourselves at all the data on the spreadsheets that make up the brains of the algorithms, we, ourselves may indeed be less interested in driving those windy roads. Or we might feel encouraged to walk two miles more to postpone possible heart problems and to avoid a higher premium. Or we might stop using the mixer for our homemade cake in order to save some money. (Will they know we’re using the mixer to make cake and not a healthier fruit smoothie?)

These would be rational choices for perfectly rational lives.

But wait, is that really how we want to live our lives? With our algorithmic personal assistant calculating all of the probabilities of all the mistakes and missteps we could be making?

Do we really want to live our lives calculating all our possible risky encounters before we go on our romantic adventure? Calculating what level of usage we can afford? With an instant hike in price per mile, the moment we turn our car to see the beauty of the valley on this even windier road?

Geesh.

Will we even walk the scenic routes anymore? (or nibble on sugar cookies for that matter?) Isn’t the point of insurance to create peace of mind? To allow us to live our lives, accepting there will always be risk, somewhere? To allow us to be rational and emotional?

Isn’t some of this about just being human?

Sometimes we just want to see the sun set over a mountain peak. See the coyote track in the desert. Feel the sea mist on our faces when we drive down that coastal highway.

The algorithm calculates the risk for us to go off the cliff. It doesn’t care about — if you can use the word care with an algorithm — our romantic nostalgic road trips, our longing for beauty.

It cares about the bottom-line and shareholder value. Packaged in such a way that it looks like we are in control of our insurance costs, that we ‘feel empowered to take decisions about how [our] actions influence coverage, insurability and pricing.’ We may not realize that, in fact, the algorithm is controlling us.

Conclusion

As observed by McKinsey, the industry is eager to move from ‘detect and repair,’ to ‘predict and prevent’.

Today, risks are still mostly priced on historical experience. AI and new data sources change the dynamics and lead to a case-by-case usage-based risk assessment that would never have been possible without modern computing power.

Let’s be sure that, as we build our futures, we ask the right questions, for us, humans. So we can continue to explore and to enjoy beauty.

Adriana Nugter is based in Brussels, Belgium. She is a longstanding expert in the area of privacy and data protection, AI regulation, standardization, wireless communications, and public policy, among others. Her activities center around law, technology, and ethics.

Shannon Mullen O’Keefe thinks and writes about topics of leadership interest for her project The Museum of Ideas. She is based in Omaha, Nebraska. Her writing focuses on areas of leadership interest including the future, technology, culture and ethics.