From an insurance and reinsurance product design perspective, addressing climate change is more of a scale and cognitive bias challenge than a product design problem. The industry has a working understanding of the principles underlying the business model and the associated risks, perils, hazards and insured assets, according to John Trace, CEO, North America, Guy Carpenter, and Jay Dhru, Global Head of Business Intelligence, Guy Carpenter.
The same, however, might not be said of the Fourth Industrial Revolution. The insurance industry, on balance, may not have a deep understanding of the emerging digital technology risks and the associated opportunities, threats, perils and hazards. The insurance industry may also not appreciate the impact that narrow artificial intelligence (NAI) will have on everything, or the inherent risks associated with NAI. NAI will change the future of government, law, wealth distribution, civil rights, war and work; accelerate income inequity; and influence how we live and relate to each other.
In the Fourth Industrial Revolution, platforms have replaced traditional companies and intangible assets have replaced heavy machinery as wealth drivers. Ocean Togo’s recently released July 1, 2020 intangible asset market study indicates that intangible assets make up 90 percent of the S&P 500’s USD 28.94 trillion market value. Apple’s market capitalization stood at nearly USD 2.3 trillion on September 2, 2020. The entire market capitalization of stocks in the Financial Times Stock Index (FTSE) 100 was valued at just under USD 2 trillion.
The intangible asset revolution presents an unparalleled opportunity for the insurance industry to develop new and complementary products and services. The insurance industry currently offers defensive and offensive intellectual property (IP) insurance and key man life insurance. More research and development work is ongoing to develop new products to protect the full range of intangible assets, including a company’s research and development, intellectual capital, processes, patents, trademarks, franchises, goodwill, copyrights, IP, business-to-business offerings, brand, hard intangibles, data, non-revenue rights, relationships and public rights.