As a reader of this newsletter, you may have seen me refer from time to time to what I call the Laws of Zero, which are driving certain costs toward zero at an exponential rate and which will have profound implications for insurers. The "law" most relevant for insurers says that, in the foreseeable future, all information about everything will be available instantly and at zero cost.
I admit that there's considerable hand-waving going on there. I'm really saying that almost all information about almost everything will be available almost instantly and at almost zero cost when compared with today. That last qualification refers to the fact that having, say, computer memory prices plunge from $300,000 per gigabyte in the 1980s to a fraction of a penny makes today's prices look awfully close to free from that earlier vantage point — and shows how free(ish) future prices will look by comparison with today.
Now, a prominent futurist, Peter Diamandis, has issued a report with some eye-popping nuggets about how rapidly costs are heading toward zero for computers, communication devices and sensors and are driving us toward nearly infinite information at nearly zero cost.
Diamandis — the founder of the X Prize Foundation, cofounder of Singularity University and coauthor of best-seller "Abundance: The Future Is Better Than You Think" — has made his full report available here. But I'll call out some of the high points:
- "In the realm of ground-based cellular networks, by 2025 there will be 2.8 billion humans connected on ubiquitous 5G [which can be 100x faster than 4G]. At the same time, 6G is also under development, which will be 100x faster" than 5G.
- "A number of multi-thousand-satellite networks (Starlink, E-Space, Kuiper, etc.) are being deployed that will ultimately cover every square meter of the Earth. Thus far, Starlink is the largest orbiting network with 3,000+ operational satellites, heading toward a goal of [42.000]. Starlink today offers speeds over 100 megabits/second" and is developing laser technology that would increase that speed by a factor of 100.
- "We are birthing a 'trillion-sensor economy' in which everything is being monitored, imaged and listened to at all times." That economy will involve: "sensors in orbit above Earth imaging the planet... sensors on fleets of drones in our skies... sensors on our autonomous cars and eVTOLs [electric planes capable of vertical takeoffs and landings], visualizing our cities... sensors on our bodies and in our bodies measuring our physiology 24x7... sensors in your home listening/watching, providing security and support... [and] industrial sensors monitoring and optimizing manufacturing."
Diamandis says there are already 260 million smart homes worldwide and expects that number to soar. He also quotes a survey by Deloitte that found that "86% of manufacturers believe that smart factory initiatives will be the main driver of manufacturing competitiveness in the next five years."
I'd add that sensors and cameras can actually be just about anywhere someone chooses to put one. Not only have the sensors and cameras become incredibly tiny and cheap, but improvements in solar power and batteries liberate them from having to be connected to the electric grid, and the ubiquity of Wi-Fi and cellular and satellite networks means there is always a communications network to hook into. Just combine a tiny antenna and a bit of solar power to a sensor or camera and put it wherever you want.
As Diamandis says, if you want to spot fashion trends, you can just put a few cameras on city streets you see as trend-setters and have AI alert you to changes (having anonymized all data, including by blurring faces, of course). If you're a farmer, you can "know the moisture content in both the sky and the soil [and] pinpoint water for healthier crops and bigger yields—while reducing water waste. Drones and robots [will] image crops for disease and inform the robots when the crops are ripe for picking."
Based on what he sees as the connection of 8 billion people and trillions of sensors, he predicts "a world of ubiquitous and abundant knowledge" where "you’ll be able to connect to anyone and anything, any time, anywhere."
Perhaps most inspiring: "Because innovation is a function of the number of humans connected to each other, enabled by tools and powered by knowledge, as these numbers all steadily increase, we’re about to witness perhaps the most historic acceleration of technological innovation ever experienced by humanity."
Like all companies, insurers will benefit from the opportunities to increase communication and collaboration, as well as the ability to tap into new talent pools around the world. But the insurance industry should gain even more than others, because we're in the business of understanding the world's risks, and in a hyper-wired world all that information will be available at essentially no cost. It was also be available (almost) instantly, which will allow for new business models.
Why focus on crunching years- or decades-old data to see what auto or life claims used to be, when you can know what's happening now? And why wait to pay for a claim after the fact when you know so much in real time that you can alert a client and maybe prevent that car crash or stop that water leak before it can do any damage?
Cheers,
Paul
P.S. The points about connectivity and sensors are just two of 20 megatrends that Diamandis describes in his report, so I encourage you to check out the whole piece. And, if you're interested in learning more about what my colleagues Chunka Mui and Tim Andrews and I have written about the Laws of Zero, you can read an excerpt from our recent book (or, of course, order one) here.