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6 Technologies That Will Define 2016

Please join me for “Path to Transformation,” an event I am putting on May 10 and 11 at the Plug and Play accelerator in Silicon Valley in conjunction with Insurance Thought Leadership. The event will not only explore the sorts of technological breakthroughs I describe in this article but will explain how companies can test and absorb the technologies, in ways that then lead to startling (and highly profitable) innovation. My son and I have been teaching these events around the world, and I hope to see you in May. You can sign up here.

Over the past century, the price and performance of computing has been on an exponential curve. And, as futurist Ray Kurzweil observed, once any technology becomes an information technology, its development follows the same curve. So, we are seeing exponential advances in technologies such as sensors, networks, artificial intelligence and robotics. The convergence of these technologies is making amazing things possible.

Last year was the tipping point in the global adoption of the Internet, digital medical devices, blockchain, gene editing, drones and solar energy. This year will be the beginning of an even bigger revolution, one that will change the way we live, let us visit new worlds and lead us into a jobless future. However, with every good thing, there comes a bad; wonderful things will become possible, but with them we will create new problems for mankind.

Here are six of the technologies that will make the change happen.

1. Artificial intelligence

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There is merit to the criticism of AI—even though computers have beaten chess masters and Jeopardy players and have learned to talk to us and drive cars. AI such as Siri and Cortana is still imperfect and infuriating. Yes, those two systems crack jokes and tell us the weather, but they are nothing like the seductive digital assistant we saw in the movie “Her.” In the artificial-intelligence community, there is a common saying: “AI is whatever hasn’t been done yet.” People call this the “AI effect.” Skeptics discount the behavior of an artificial intelligence program by arguing that, rather than being real intelligence, it is just brute force computing and algorithms.

But this is about to change, to the point even the skeptics will say that AI has arrived. There have been major advances in “deep learning” neural networks, which learn by ingesting large amounts of data. IBM has taught its AI system, Watson, everything from cooking, to finance, to medicine and to Facebook. Google and Microsoft have made great strides in face recognition and human-like speech systems. AI-based face recognition, for example, has almost reached human capability. And IBM Watson can diagnose certain cancers better than any human doctor can.

With IBM Watson being made available to developers, Google open-sourcing its deep-learning AI software and Facebook releasing the designs of its specialized AI hardware, we can expect to see a broad variety of AI applications emerging because entrepreneurs all over the world are taking up the baton. AI will be wherever computers are, and it will seem human-like.

Fortunately, we don’t need to worry about superhuman AI yet; that is still a decade or two away.

2. Robots

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The 2015 DARPA Robotics Challenge required robots to navigate over an eight-task course that simulated a disaster zone. It was almost comical to see them moving at the speed of molasses, freezing up and falling over. Forget folding laundry and serving humans; these robots could hardly walk. While we heard some three years ago that Foxconn would replace a million workers with robots in its Chinese factories, it never did so.

Breakthroughs may, however, be at hand. To begin with, a new generation of robots is being introduced by companies—such as Switzerland’s ABB, Denmark’s Universal Robots, and Boston’s Rethink Robotics—robots dextrous enough to thread a needle and sensitive enough to work alongside humans. They can assemble circuits and pack boxes. We are at the cusp of the industrial-robot revolution.

Household robots are another matter. Household tasks may seem mundane, but they are incredibly difficult for machines to perform. Cleaning a room and folding laundry necessitate software algorithms that are more complex than those required to land a man on the moon. But there have been many breakthroughs of late, largely driven by AI, enabling robots to learn certain tasks by themselves and by teaching each other what they have learned. And with the open source robotic operating system (ROS), thousands of developers worldwide are getting close to perfecting the algorithms.

Don’t be surprised when robots start showing up in supermarkets and malls—and in our homes. Remember Rosie, the robotic housekeeper from the TV series “The Jetsons”?  I am expecting version No. 1 to begin shipping in the early 2020s.

3. Self-driving cars

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Once considered to be in the realm of science fiction, autonomous cars made big news in 2015. Google crossed the million-mile mark with its prototypes; Tesla began releasing functionality in its cars; and major car manufacturers announced their plans for robocars. These cars are coming, whether or not we are ready. And, just as the robots will, they will learn from each other—about the landscape of our roads and the bad habits of humans.

In the next year or two, we will see fully functional robocars being tested on our highways, and then they will take over our roads. Just as the horseless carriage threw horses off the roads, these cars will displace us humans. Because they won’t crash into each other as we humans do, the robocars won’t need the bumper bars or steel cages, so they will be more comfortable and lighter. Most will be electric. We also won’t have to worry about parking spots, because they will be able to drop us where we want to go to and pick us up when we are ready. We won’t even need to own our own cars, because transportation will be available on demand through our smartphones. Best of all, we won’t need speed limits, so distance will be less of a barrier—enabling us to leave the cities and suburbs.

4. Virtual reality and holodecks

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In March, Facebook announced the availability of its much-anticipated virtual reality headset, Oculus Rift. And Microsoft, Magic Leap and dozens of startups aren’t far behind with their new technologies. The early versions of these products will surely be expensive and clumsy and cause dizziness and other adverse reactions, but prices will fall, capabilities will increase and footprints will shrink as is the case with all exponential technologies. 2016 will mark the beginning of the virtual reality revolution.

Virtual reality will change how we learn and how we entertain ourselves. Our children’s education will become experiential, because they will be able to visit ancient Greece and journey within the human body. We will spend our lunchtimes touring far-off destinations and our evenings playing laser tag with friends who are thousands of miles away. And, rather than watching movies at IMAX theaters, we will be able to be part of the action, virtually in the back seat of every big-screen car chase.

5. Internet of Things

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Mark Zuckerberg recently announced plans to create his own artificially intelligent, voice-controlled butler to help run his life at home and at work. For this, he will need appliances that can talk to his digital butler: a connected home, office and car. These are all coming, as CES, the big consumer electronics tradeshow in Las Vegas, demonstrated. From showerheads that track how much water we’ve used, to toothbrushes that watch out for cavities, to refrigerators that order food that is running out, all these items are on their way.

Starting in 2016, everything will be be connected, including our homes and appliances, our cars, street lights and medical instruments. These will be sharing information with each other (perhaps even gossiping about us) and will introduce massive security risks as well as many efficiencies. We won’t have much choice because they will be standard features—just as are the cameras on our smart TVs that stare at us and the smartphones that listen to everything we say.

6. Space

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Rockets, satellites and spaceships were things that governments built. That is, until Elon Musk stepped into the ring in 2002 with his startup SpaceX. A decade later, he demonstrated the ability to dock a spacecraft with the International Space Station and return with cargo. A year later, he launched a commercial geostationary satellite. And then, in 2015, out of the blue, came another billionaire, Jeff Bezos, whose space company Blue Origin launched a rocket 100 kilometers into space and landed its booster within five feet of its launch pad. SpaceX achieved the feat a month later.

It took a space race in the 1960s between the U.S. and the USSR to even get man to the moon. For decades after this, little more happened, because there was no one for the U.S. to compete with. Now, thanks to technology costs falling so far that space exploration can be done for millions—rather than billions—of dollars and the raging egos of two billionaires, we will see the breakthroughs in space travel that we have been waiting for. Maybe there’ll be nothing beyond some rocket launches and a few competitive tweets between Musk and Bezos in 2016, but we will be closer to having colonies on Mars.

This surely is the most innovative period in human history, an era that will be remembered as the inflection point in exponential technologies that made the impossible possible.

Home Is Where the (Smart) Hub Is

The smart home was all the rage at the 2016 CES (Consumer Electronics Show). The exhibit space and products devoted to smart homes was absolutely mind-boggling.

Well-known products such as the Nest Thermostat, the Roost Smart Battery for smoke alarms and Amazon Echo were displayed alongside a wide variety of other products to make every “thing” in your home smart. Want your refrigerator to assemble a grocery list for you by bar code scans of items about to run out? No problem – the Samsung Family Hub Refrigerator can do that. Looking for a bed with biometric sensors to track your sleep, monitor physiology and make adjustments to improve your night’s rest? Look no further than the Sleep Number-it bed. Need to separately monitor and manage the temperature and environment for each room? The Ecovent system has that capability – and can even alert you if your home is at risk for mold. The list could go on and on.

Given unlimited time and money, you could truly make your home an Internet of Things showplace with smarts everywhere you turn. Of course, you would probably not have enough room on your smartphone to manage all the apps that control the smart things. So how to make sense of all the options? And how should insurers capitalize on the smart home trend? For starters, it is useful to think of smart home devices in four categories:

  • Security/Safety: Existing home security companies are all evolving to provide smarter systems using wireless technologies and more sophisticated sensors. In addition, companies like Ring and Glue provide smart locks and doorbells for secure entry. Others focus on safety through monitoring and pre-emptive alerts for leaky pipes, smoke alarms, failing sump pumps and other things.
  • Entertainment/Information: Smart TVs are already a fixture in many homes, with availability from a variety of suppliers. The Amazon Echo responds to voice questions and prompts to provide news, weather and information, among other capabilities. Devices for gaming are incredibly powerful, and virtual reality headsets are gaining in adoption.
  • Energy/Environment: The Nest Thermostat device has led the way in providing a smart, connected way to monitor and manage the temperature and environment throughout the home for comfort and energy efficiency. Others, such as Lutron, offer controls for lights, shades and temperature, aimed at saving energy.
  • Commerce: The Amazon Dash Button may seem to be a gimmick, but it has opened up possibilities for e-commerce by allowing homeowners to reorder items with literally the touch of a button. Smart appliances and embedded touch screens automate the ordering of parts before they fail or common supply items before they run out.

Then come the questions about how (and even if) all of these devices will work with each other. There is a great deal of overlap and potential interaction between devices both within and between these categories. Enter the smart home hub. There are a number of companies and devices purporting to be hubs to connect the smart things in your home. Some operate well within just one domain – coordinating security-related devices, for instance. Others are broader and have the capability to connect a wider range of smart devices. The Apple HomeKit, Samsung SmartThings Hub and Amazon Echo are a few of the well-known hubs, but others are emerging.

The take-home is that insurers should consider three actions to better understand the smart home space and its potential opportunities and threats.

First, monitor the evolution of the companies and products in the space and the product adoption trends. It probably goes without saying that this is easier said than done.

Second, make sure your tech guys follow the standards, communication protocols and tech issues as they progress (especially related to data-security concerns).

Finally, actively partner with and invest in companies in the smart home space. First-hand learning and experimentation is paramount if you want to gauge the opportunities to offer new insurance product offerings or services that will set you apart from your competitors.

New Vulnerabilities in the Connected World

Many exciting TV shows and movies include hacking as standard fare – overriding security systems, changing traffic lights, causing explosions, even committing untraceable murders. Hacking makes for interesting entertainment. The frightening part? It’s all possible.

The digital connections in our world are multiplying faster than we realize. It is difficult to even think of anything that cannot be connected. Connected cars and connected homes are advancing by leaps and bounds. Livestock such as cattle and sheep are tracked electronically, and your dog or cat may have an embedded chip. Even bees are being outfitted with tiny RFID backpacks. Roads, buildings and transportation systems are beaming real-time information to servers in the cloud. The rapid rise of wearables, hearables, implantables and personal medical devices means that an increasingly large number of people are connected.

The increasingly connected world provides terrific opportunities to improve life on earth. But with opportunity often comes threat – in this case the threat of hacking. And the facts are scarier than the fiction.

The word “hacking” conjures up images of millions of credit cards being stolen from banks or retailers, or perhaps the stealing of corporate secrets or even cyber-espionage between countries. Insurers have been at the forefront of this battle, designing cyber risk coverages and policies to help individuals or businesses address the financial exposure of hacking. But the connected world increases the hacking potential in incalculable ways. Here are just a few examples of other existing vulnerabilities:

  • Connected Cars: Wired magazine hired two hackers to demonstrate how a Jeep Cherokee could be hacked. The hackers showed that they could take over simple tasks like locking or unlocking doors, and could also take over the steering wheel and drive the car over an embankment.
  • Toys: The new Hello Barbie Doll is connected to the Internet and can be hacked to listen in to the conversations in your home.
  • Laptops and Smart TVs: Bad guys can remotely take over the camera and audio for these devices to spy on the laptop user or anyone viewing a Smart TV.
  • Medical Devices: Insulin pumps and other medical devices can be hacked to alter their treatment. For example, the insulin dosage can be changed, resulting in insulin shock and even death.
  • Wearables: Connected watches, shoes and health monitoring devices are notoriously exposed, especially because they often collect very private, personal information.

Fortunately many of these incidents were the work of white hat hackers hired to expose weaknesses. Unfortunately, most of the exposures still exist, and every new chip, sensor and connected device becomes a target. There are several key implications for insurers and individuals:

  • Cyber risk insurance must greatly expand. The industry has done a yeoman’s job thus far in helping to address financial exposures. But now, whole new classes of cyber threats must be evaluated and addressed.
  • Loss control must increasingly consider cyber safety. Individuals and businesses need advice on how to protect their valuable digital information, related to both traditional and new sources.
  • Insurers must consider their own growing cyber vulnerabilities. As companies employ drones, IoT devices and wearables for employees, they must understand and address the potential exposures from theft of the related information.
  • The industry must actively participate in cyber initiatives. New technology defenses, law enforcement approaches and regulation will all play a role in thwarting hackers. Insurers should provide expertise, investment and support to advance important initiatives.

It’s an exciting time to be alive. And it’s an exciting time to be in the insurance industry. Technology, with all of its benefits, is advancing fast – but faster than we can regulate and manage it.

New risks and threats from connected devices definitely exist. But connected devices also provide great opportunities for the insurance industry to play to its strength – protecting valuable assets, promoting safety and providing peace of mind to individuals and businesses alike.