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May 20, 2016

How Connected Will Connected World Be?

Summary:

We may evolve to a world of highly connected cities and loosely or marginally connected rural areas. Insurers need to start scenario planning.

Photo Courtesy of Davide D'Amico

The idea of a fully connected world has become quite popular in the press, and it is driving much of the innovation and start-up activity these days. At SMA, we continue to articulate that there will be many different ecosystems in the connected world, such as smart homes, connected cars, smart cities, intelligent farming and so forth. Each will have many participants and contributors to its particular ecosystem, including device manufacturers, systems integrators, data/analytics companies, service providers and, yes, even insurers.

It is interesting to consider how connected the connected world might really become. I am thinking of the potential related to big cities and rural areas.

See also: ‘Smart’ is Everywhere, but…

The digital divide has been a concern for quite some time. The digital haves and have-nots are usually described in terms of socio-economic terms, with the less economically advantaged missing out on the benefits of the digital world — and now the connected world. But the divide may also occur between cities and rural areas. What are some reasons to think this gap may widen?

  • Innovation test beds:
    Let’s face it, it seems like half the stories you see about innovative new companies and ideas emanate from San Francisco. While innovation originates in many places, the test beds for new ideas are most often the big cities.
  • Communications infrastructure:
    The explosive growth of the mobile world has already created significant challenges for telecommunications capacity. As connected-world devices and sensors come online, new communications platforms and dramatic increases in capacity will be required. The dense structures and populations of big cities make it easier to test and deploy new wireless and wired solutions.
  • Concentration of business and government:
    More of the institutions that, and people who, run the world are located in big cities. For political and other reasons, it is often easiest to begin technology experiments in their backyard, so to speak. Also, the concentration of businesses, healthcare facilities, utilities and transportation systems makes big cities a better target for initial implementations of new connected-world applications.
  • Smart cities:
    Cities have the scale that is often required for broader testing and for cost-effective implementations. The smart city movement recognizes this while also working to address many of the unique problems of the world’s largest cities (such as traffic congestion, pollution and energy consumption).

The one connected-world ecosystem where rural areas will certainly forge ahead is in intelligent farming. Smart agriculture solutions are already being broadly tested and implemented. From highly automated and connected farming machinery to sensors in the soil to robotic milking operations at dairies, there is great potential to improve the yield and quality of agricultural output.

What does all this mean for insurance? First, this is not to say there will not be smart homes, buildings, health care facilities, etc. in rural settings. Of course there will be, but it may happen that we evolve to a world of highly connected cities and loosely or marginally connected rural areas. Suburbs will fall somewhere in between in terms of connectivity. Insurers should conduct scenario planning to assess the implications of this potential new divide in the connected world. This may be especially important for those with a focus on urban areas because the risk landscape is likely to change the most over the next decade due to the growth of the connected world.

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About the Author

Mark Breading is a partner at Strategy Meets Action, which helps insurers develop and validate their IT strategies and plans, better understand how their investments measure up in today’s highly competitive environment and gain clarity on solution options and vendor selection.

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