The progress of mankind has relied heavily on technologyadvancement in two key areas: transportation andcommunications.

Communications technologies, for moving information from oneplace to another and presenting that information to people in newand different ways, have been instrumental to the progress ofcivilization.

Transportation technologies, for moving people and things fromone place to another in faster, safer, and more comfortable ways,have been advancing since the invention of the wheel. This articlewill reflect on the latter, looking into the next decade andexploring some big implications for the insurance industry.

Driverless vehicles

Driverless vehicles have been grabbing the headlines now for afew years. That's understandable since most of us can relate todriving a car and are forming opinions on what we think about themove to autonomous vehicles. However, the effort by the major techcompanies and auto manufacturers to develop and test thesecapabilities in cars is only one part of a much larger story— one that will greatly affect every person, business, andindustry.

And just as significant is the progress being made with manyother types of vehicles that operate on land, sea, or in the air.Add in the evolution toward a smart transportation infrastructure,and the ingredients for massive transformation are ready andwaiting.

Much of what is happening in this realm seems like sciencefiction, but is likely to be common in 10 years. Consider how muchcan happen in that time frame. Just 10 years ago (in 2006), theiPhone had not even been introduced. There were no mobile apps.Now, we can't imagine what life would be like without our mobiledevices.

Autonomous buses, cargo ships, taxis

Some of the other developments that are worth following includelive trials of autonomous buses and taxis; the platooning of autonomous trucks; autonomous cargo ships,submarines, and drones; and autonomous commercial vehicles used inmining and agriculture. And don't forget flying cars. Thistechnology is actually gaining attention and funding.

Add in the Hyperloop concept (the testing ofwhich is now underway), supersonic air travel, and other means ofhigh-tech transportation, and it is not difficult to imagine thekind of world we see in Star Trek, Star Wars, or other popularscience fiction. 

The advancement of autonomous vehicles of all sorts will beaccompanied by progress in vehicle-to-vehicle (V2V) andvehicle-to-infrastructure (V2I) technologies that allow movingvehicles to communicate with each other and their surroundings toensure the smooth and safe flow of traffic, wherever it may be. Sowhat does this all mean for insurance?

P&C insurance affected in fundamental ways

Well, it does not take a rocket scientist to understand thatvirtually every type of property/casualty insurance will beaffected in fundamental ways. Some of these scenarios have alreadybeen touted in the press and considered by industry strategists,but the implications may be even more far reaching than mostrealize.

Consider implications in just three areas:

• Workforce mobility: Information andcommunications technologies have already created an acceleratingtrend away from the central office model. New transportationtechnologies will result in a reduced need for workers to beclustered in major centers. Rapid transportation options will allowthose farther away to travel where they need to be, and the techfor working remotely will continue to foster the work-anywheretrend.
• Manufacturing andDistribution: Opposing factors will likelydisrupt the manufacturing and distribution models of the lastcentury. The ability to transport goods much more rapidly andsafely at low cost via autonomous transportation networks may leadto giant, centralized factories. On the other hand, 3D printing andthe desire for custom items without waiting may favor localmanufacturing with a different kind of short distance transportdominating.  
• Agriculture: Automated machinery isalready common in agricultural production today. The move to morefully-autonomous tractors, combines, and other vehicles willfurther change the industry. When sensors, biotechnology, verticalfarming techniques, and other tech are considered, the very natureof the farm is likely to be substantially different 10 years fromnow.

The list goes on, and it's pretty heady stuff. The implicationsfor population distribution, energy, travel, education, andvirtually every aspect of the economy are huge. In all of theseareas, the patterns change, the companies change, individual'sbehaviors change, and the risks change.

New risks are emerging

Existing risks may be dramatically reduced, resulting in largedecreases in premiums. On the other hand, new risks are emerging,and the opportunities to serve customers in new ways are there forinsurers bold enough and agile enough to rethink their business forthis new era.

For more on the implications of emerging tech for insurance, seeSMA's research report, "The Top 10 Ways Emerging Tech Will TransformInsurance."

Mark Breading is partner atBoston-based SMA. Emailhim at [email protected].This article first appeared on StrategyMeetsAction.com and isreprinted here with their permission. Opinions expressed in thisarticle are the author's own.