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The future of work in health – preliminary observations for pharma/life-sciences

June 21, 2017

The mega trends affecting the healthcare sector are well-documented: ageing populations; longevity increasing the prevalence of chronic disease; more knowledgeable and assertive patients; public policy challenges in funding and resource-allocation against a background of seemingly inexorable increasing demand and scientific opportunities.

Technological developments of many kinds offer opportunities for transforming the way healthcare is delivered, bearing particularly on the relationships between professionals and patients. Virtual consultations; home-based monitoring; implant drug-delivery – all tend to obviate the need for the time-consuming surgery visits. It puts the patient at the centre of the healthcare system; traditionally, the system has been largely designed around the professional service suppliers. This is predicated on patients being willing and able to take the primary interest in their own health and health outcomes. While much evidence confirm such trends, it remains unclear whether individuals will seek to practise a healthier lifestyle; or, alternatively to look to pharmaceutical intervention to nullify the effects of an unhealthier hedonistic lifestyle. There are policy – and cost – implications from such human choices.

Much of the transformative drive in the healthcare sector will come – as in so many sectors – from enhanced data and analytics. Big data analytics applied dynamically to patient records can be harnessed to assess, monitor and, through artificial intelligence protocols, intervene to effect outcomes. It can equally be applied to another revolutionary development in the area of genetics, where understanding of which population sub-types respond to which therapies can transform the nature of diagnosis and therapy. This will also tend to put the focus more on the individual patient; and while it is unrealistic to conceive of an individualised medicine, it is feasible for patients to be grouped into a number of sub-types for which effective therapies can be identified and administered.

For such visions to be realised requires a range of hurdles to be overcome, not all of which relate strictly to the pace of scientific development. They also include the concerns of the public in relation to the sharing of individual medical and genetic data, which could have profound implications for individuals and families. There are also wider issues involving population-wide genetics and the need for ‘bio-banks’ to analyse and determine the sub-types predisposed to specific diseases.

The consequences of a more patient-focussed system on financing are yet to be relation to whether future funding of healthcare will be more-or-less public, or more-or-less private. For the pharma/life-sciences industry, it will be highly important to understand the nature of which type of demand it will need to meet: a consumer market or an industrial market: the key success factors will be distinctly different, especially in relation to the types of products demanded and the willingness to pay. One feature that will be common to both, nevertheless, will be the emphasis on evidence-based value propositions relating to health outcomes of alternative therapies – a field relying heavily on data analytics.

In a world where public funding predominates, pharma/life-science organisations would negotiate contracts with payers based on ex-post treatment outcomes, rather than the flawed system of ex-ante outcomes from limited clinical trial data. Research would have a new impetus – more selective and less serendipitous – but the industry would also be more conscious of the need to ensure an end-market for the product through close liaison with payers. It is also possible that the nature of product design and development would change from one where companies offer products of their own conception to more of a defence-type procurement system, in which payers set out what products they want and are prepared to pay for. The traditional mind set among public funders to see therapeutic breakthroughs as a cost threat rather than a benefit opportunity might well still prevail. Hence the pharma/life-science industry would need deeper skills to link up with patient groups, who would wish to take advantage of the new therapeutic opportunities and act as a joint lobbying force on public funders.

Alternatively, in a world where private funding predominates, with private sector being encouraged, most likely through a thriving private insurance sector. Individuals would take responsibility for managing their risk profiles through lifestyle and behaviour. There would be a strong focus on the development and supply of medicinal therapies for specific population genotypes. Such developments might well blur the difference between different types of healthcare, such as prevention, genetic screening, genetic counselling, lifestyle management, diagnostics and therapeutic options. The pharma/life-science sector can either be a marginal provider or a big orchestrator of a whole well-being programme in partnership with other specialist functions. This distinction might be a big differentiator.

In any event, the future is likely to encompass a sea-change in the operating model of the pharma/life-science industry and in its relationships with its key constituents – payers, healthcare professionals and patients. A very different range of skills will be required for the industry.

Written by Mike Owen, SAMI Fellow and Chairman.

The views expressed are those of the author and not necessarily of SAMI Consulting.

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What Price Brexit?

June 14, 2017

Following the UK General Election on 8 June 2017, David Lye, Director and Fellow of SAMI, considers the options for Brexit

Where are we Starting From?

When she called the General Election in April, Prime Minister Theresa May said that she saw it as the way to “provide for stability and certainty”. Events have not worked out as she hoped. After the Election, she presides over a minority Government, reliant on the Democratic Unionist Party (DUP) of Northern Ireland. She does not have the Parliamentary majority to drive through a Brexit deal against the wishes of the other parties.

What Options are there?

Mrs May said of Brexit, in her party’s manifesto, that the UK would leave the single market and control its own borders, concluding:

“The final agreement will be subject to a vote in both houses of parliament. As we leave the European Union, we will no longer be members of the single market or customs union but we will seek a deep and special partnership including a comprehensive free trade and customs agreement. There may be specific European programmes in which we might want to participate and if so, it will be reasonable that we make a contribution. We will determine a fair settlement of the UK’s rights and obligations”

She repeated her warning that “no deal would be better than a bad deal”.

Mrs May’s failure to win a clear majority jeopardises this strategy. It is not clear whether the DUP will agree to support leaving the single market, let alone walking away from the table with no deal. They are concerned at the potentially damaging impact on trade and security in Northern Ireland if border controls are imposed once more between it and the Irish Republic. It is not even clear that Mrs May will have the full support of her party for such a strategy. Ruth Davidson, leader of the Scottish Conservatives has warned that Mrs May’s plan for Brexit needs to be “reopened”. Ms Davidson says she would like to see a focus on the economy and free trade, and does not see migration controls as a key focus.

So where do we go from here?

Scenario 1 – Press on Regardless

The Government decides to press on with its original negotiating strategy, in the belief that the majority of the UK electorate share the view that “Brexit means Brexit”. Mrs May (or her Eurosceptic successor as leader, should she be forced to resign) decides that there is no option other than to “go for broke”.

Under this scenario, it is not certain that the Government would get the support it needed to win a vote in Parliament. At which point, we would face the prospect either of putting the “deal” to a referendum, or another General Election. Were the Government to hold a referendum and lose, the Government would probably fall in any case.

Scenario 2 – Soft Brexit

The Government decides that discretion is the better part of valour, and seek a deal that enables Britain to retain access to the single market, perhaps through membership of the European Economic Area (EEA) – the member states of the EU, plus Norway, Iceland and Liechtenstein. The UK would, no doubt, try to seek a preferential deal, but it is hard to see that it would get one, if the EU felt sure that the option of “no deal” was no longer attainable for the UK Government. The Norway option is the deal on the table.

This option is easier to negotiate with the EU members, and many commentators welcome it, but it enrages a substantial group of Conservative MPs and the majority of party members, who refuse to support it, leaving the Government dependent on votes from Opposition parties to secure Parliamentary agreement. It might even, like the Repeal of the Corn Laws in 1846, split the Conservative Party in two.

The Government seeks to mitigate this risk by saying that it sees this as “unfinished business”, and will – at some point in the future – seek to achieve a better deal for Britain, in the circumstances of the time.

This causes much head-shaking and eye-rolling in the EU – the UK once more seeking special treatment. The EU refuses to offer any guarantees. So the issue is parked. There is a Soft Brexit, but still with the potential to reignite at some point in the future.

Scenario 3 – Not going anywhere

The Government recognises that Hard Brexit is no longer achievable, and that Soft Brexit would cause civil war within the Conservative Party. It therefore seeks to suspend Article 50, and thus stall negotiations until it has had time to consult with Opposition parties on an approach that all can support.

During this pause, the Government falls on a confidence vote in Parliament. There is a General Election, which sees the Labour Opposition elected. The incoming Government has said throughout the campaign that it “respects the result of the referendum”. But it also recognises that it has been propelled to power on the massive numbers of votes of the young, who overwhelmingly oppose Brexit, and have said so vociferously through online petitions, social media memes and via social media-based news forums.

The Government announces that it will consult the country on how to take things forward. After a round of public meetings, polling, and a written and online consultation, it announces that there is no longer a clear case for Brexit, and public support appears to have waned. Therefore it will not seek to reactivate the stalled negotiations.

Scenario 4 – Events, dear boy

The negotiations regarding Brexit are superseded by other events. Within the EU, proposals to accelerate integration lead to a rift between the “core” countries (the original members) and the accession countries. Or the ongoing debt crisis comes to a head, as Italy demands substantial easement of the terms of its debt.

To the EU, Brexit is now an unwelcome distraction; the dispute over integration and/or Eurozone debt are far more pressing and important. To Britain, the problems in the EU give renewed hope and encouragement to the hard brexiteers, who argue that the whole institution is facing an existential crisis, and so there is little to be gained by remaining within the EEA.

Alternatively, renewed hostilities between Russia and Western Europe, an upsurge in terrorism, and the arrival in 2020 (or before) of a pro-EU American President, persuade the UK Government that it needs to remain actively engaged with its European partners.


It is impossible to predict with any certainty the outcome of Brexit from where we are today. But the scenarios do support the view that the passage of time opens the way to a wider range of possibilities that simply “Hard” or “Soft” Brexit.

Written by David Lye, SAMI Fellow.

The views expressed are those of the author and not necessarily of SAMI Consulting.

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What does tomorrow’s General Election hold for social care?

June 7, 2017

The election is approaching and we will all make our individual decisions on which way to vote based on a whole range of factors.

And it is certainly turning out to be a much more interesting campaign that most of us expected when the election was announced.

However some aspects of the manifestos will impact directly on what happens in our day job world.

Here I set out some of the key areas difference and similarity between the three main Party’s manifestos.

Let’s take social care first as it has certainly been in the news with the May “U-turn” on the contribution to costs cap.

The Conservative manifesto points out that under the current system, care costs deplete an individual’s assets, including in somecases the family home, down to £23,250 or even less.

They propose three connected measures. First, they will align the future basis for means-testing for domiciliary care with that for residential care.

This will mean that the value of the family home will be taken into account along with other assets and income, whether care is provided at home, or in a residential or nursing care home.

Second, they will introduce a single capital floor, set at £100,000.

This will ensure that, no matter how large the cost of care turns out to be, people will always retain at least £100,000 of their savings and assets, including value in the family home.

However the Manifesto contains no cap on the costs – they explicitly rejected the Dilnot cap.

Third, they will extend the current freedom to defer payments for residential care to those receiving care at home.

They do mention the proposed Green Paper but its remit is set as looking at improving the quality of care. If the Conservatives get in it will be interesting to see how far they move from what is set out in their manifesto.

Labour take a different tack. They will address the immediate funding crisis by increasing social care budgets by a further £8 billion over the lifetime of the next Parliament.

They will also move towards a National Care Service will be built alongside the NHS, with a shared requirement for single commissioning, partnership arrangements, pooled budgets and joint working arrangements.

They will place a maximum limit on lifetime personal contributions to care costs, raise the asset threshold below which people are entitled to state support, and provide free end of life care.

They will seek consensus on a cross-party basis about how it should be funded, with options including wealth taxes, an employer care contribution or a new social care levy.

The Lib Dems also say they will implement a cap on the cost of social care.

Overall then we can see a consensus between these two Parties and if the Conservatives do get in with a small majority we might finally see the care costs cap coming into effect opening a space for new long term care product.

Moving on to health, each Party commits to increased spending for the NHS but there are some distinctive features in each Manifesto.

The Conservatives will abolish the cap on the number of doctors that can enter medical training in England.

Their aim is clearly to reduce the reliance on non-UK trained doctors. Whether this can be achieved without reducing skill levels remains to be seen.

All three parties mention NHS England’s Sustainability and Transformation Plans.

Part of the STP remit is to rationalise the number of hospitals and the Conservatives qualify what they will be allowed to do by stating that any plans must be clinically led and locally supported. Labour take a harder line.

They will halt and review them and ask local people to participate in the redrawing of plans with a focus on patient need rather than available finances.

The Lib Dems will establish a cross-party health and social care convention, bringing together stakeholders from all political parties, patients groups, the public and professionals from within the health and social care system to carry out a comprehensive review of the longer-term sustainability of the health and social care finances and workforce, and the practicalities of greater integration.

We have been before many times before and there appears to be no political will or consensus to support fundamental hospital rationalisation.

Somewhat surprisingly given they introduced it back in the Thatcher years, the Conservatives will review the operation of the internal market.

In addition they will take on the doctors again – this time a new contract for both GPs and hospital consultants. Good luck there.

Labour focus on guaranteeing and upholding the standards of service to patients, for example access to treatment within 18 weeks, taking one million people off NHS waiting lists by the end of the next Parliament and guaranteeing that patients can be seen in A&E within four hours.

The Lib Dems take a more direct approach on funding promising an immediate 1p rise on the basic, higher and additional rates of income tax which would be ring-fenced to be spent only on NHS and social care services.

In the longer term, and as a replacement for the 1p Income Tax rise, they will develop a dedicated health and care tax on the basis of wide consultation which will bring together spending on both services into a collective budget

Finally what about PMI. And insurance premium tax. Conservatives and Lib Dems don’t mention either. So we don’t know. Labour will fund free parking in NHS England for patients, staff and visitors – by increasing the tax on PMI premiums.

Either way the outlook for PMI in terms of supportive Government interventions does not look good whichever Party enters power.

Finally to welfare reform. The Conservatives are pretty brief on this. They recommit to getting 1 million more people with disabilities into employment over the next ten years and to give unemployed disabled claimants or those with a health condition personalised and tailored employment support.

They say they have no plans for further radical welfare reform and will continue the roll-out of Universal Credit

Both Labour and the Lib Dems will end some of the welfare cuts. For example they will both scrap the bedroom tax, reinstate Housing Benefit for under-21s and scrap cuts to work allowances in Universal Credit.

The Lib Dems commit to taking forward the recommendations of the House of Lords Select Committee on Financial Exclusion, in particular by expanding the FCA’s remit to include a statutory duty to promote financial inclusion as one of its key objectives.

No Party makes mention of income protection insurance. Not a huge surprise, but its omission is neither encouraging nor discouraging.

Written by Richard Walsh, SAMI Fellow and first published in Cover magazine, June 2017.

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The future of cities

May 24, 2017

I recently ran a webinar with Cat Tully of the School of International Futures ( ) on the Future of Cities. It can be found at for Gill's blog on cities

Why did we single this issue out? The reasons are simple. Never before has the world supported over 7bn people, anticipated to add an extra 2bn in due course, and never before has the majority of the population lived in cities. So it is uncharted territory, and demands scenario thinking in addition to forecasting. How can we meet the ambitions of people, in this world?

As General Dwight Eisenhower famously said, “In preparing for battle, I have always found that plans are useless …

……but planning is indispensable.”

So what planning should we be doing for cities in 2040 and beyond? We used for our analysis some scenarios which have stood the test of time, first developed for long term thinking about the future of financial services by the L3F (Long Finance Forum of Futurists) and published as “In Safe Hands? The Future of Financial Services” report, find it at

The report is the result of a scenario planning exercise conducted by internationally recognised futurists and key figures from the global financial services industry. The report plots a series of possible future scenarios for the global financial services market, and considers the future of financial services over the next decades. The report identifies a number of surprises which come out of the analysis. These range from a question mark over the future of insurance, to the change in the nature of assets which will be valued.

The project brought together experts across the industry. Our consensus is that as the UK and United States lose influence and power as we head into a world dominated by today’s emerging markets, there is a long term risk to London’s financial services leadership. However, one scenario brought out the potential to leverage its multicultural workforce of over 270 nations and consolidate its position as the melting pot for global financial services.

The team built on the work in Beyond Crisis to identify macro global factors affecting the world by 2050:

  • The global population will grow to nine billion and get older, with most of the additional people in Africa and Asia. This will cause major shifts of economic power, causing turbulence as political shifts follow.
  • The new centres of power may not share the value systems of the west, or the Washington consensus.
  • Technology (info, cogno, bio, nano) will continue to introduce changes in personal capacity and lifestyles, while ICT will underpin much of society as well as commerce.
  • Ecological, energy and environmental limits will be tested or breached as the population increases, the percentage of the population living in cities approaches 70 percent and the new middle class eats meat, uses cars, refrigerators and electronic goods and travels for pleasure.

Within this world, the team developed four possible futures for the global financial services industry;

  • Second Hand – the world and financial services are recognisable from today, though most financial services will be largely automated, the current players will have largely disappeared, and many of the new players will be based outside the OECD countries. Land based assets and permits for citizenship or reproduction are highly valued.
  • Visible Hand/Globalisation – the world attempts to tackle global financial systemic risks through Washington consensus methods and faces increased volatility. The homogeneous global culture is short-term, consumer-light and carries the seeds of its destruction before 2050. Gold is thought to protect best against volatility.
  • Long Hand/Affinity Groups – financial services are mostly organised around communities of affinity, spanning countries and regions. Assets are allocated by the market within a community and intermediated by technology. The most highly valued asset classes vary with the community: they may be intellectual property and permit’s to reduce the effect of population pressure; or land-based assets.
  • Many Hands/City Societies – financial services are mostly organised within city states, which differ wildly in their brand and values. Permits to live or operate in desirable city states are highly valuable assets. This could of course be implemented through high property prices rather than a state system.

scenarios for Gill cities blogToday, the financial services industry manage capital and debt, but we could envisage that by 2050, a primary role of the industry could be to manage ecological, environmental and energy resources. As the population of the globe hits 9 billion people, the assets people value today could have been replaced by a permit to live in a city state or to reproduce. The macro global shifts lead us to believe that The City of London may have to transform from a financial centre that trades stocks and bonds to one that manages the availability of water and other permits.

This may seem an extreme leap from today’s world, but, what the last years should have taught our political leaders and financial services CEO’s, is that we cannot predict the future by looking backwards. This should be the context for thinking about the future of cities.

Written by Gill Ringland, SAMI Fellow and CEO.

The views expressed are those of the author and not necessarily of SAMI Consulting.

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Is there evidence that foresight works?

May 24, 2017

We were asked the other day – what is the evidence that foresight works? Particularly, does scenario planning lead to better outcomes? Why should an organisation engage in this sort of thinking?

The importance of the question – and that it can be answered – is highlighted by the recent McKinsey report on Long Term Thinking – see The report has led to the launch of an index of long time horizon companies, as evidenced by their public reports relating to investment, earning growth, margin growth, quarterly management and earning per shares growth. And of course a long tem view needs supporting by a view of what futures might hold. So how do organisations improve their view of futures?

As Business Schools have increased their footprint, many managers have been exposed to scenario planning as a tool for strategic thinking. While there are many variants of scenario thinking and many other tool sets – see for instance Patricia Lustig’s “Strategic Foresight” – – scenario planning has been the most widely used methodology. I first came across scenarios when I was asked to take a strategy role at ICL and found that nobody had a view of where the IT industry was going and wrote up my experience in “Scenario Planning: Managing for the Future”, see

SAMI has of course many case studies on our web site which together build a picture of what works and what does not, as does the literature based on the Shell experience eg

Another perspective can be found in “Scenario projects in Japanese government: Twenty years of experience, five tales from the front line” which can be found at

Directly tackling the evidence through evaluation in different environments, we know of a classic book on the use of Foresight in Research – which for instance evaluated how to get better results from Delphi following 25 years of experience in Japan – Research Foresight, Ben R Martin and John Irvine, Pinter, 1989. A more recent article is Martin, Ben (2010) The origins of the concept of `foresight’ in science and technology: an insider’s perspective. Technological Forecasting and Social Change, 77 (9). pp. 1438-47. ISSN 0040-1625

A paper evaluating corporate performance linked with foresight is

Professor Gerard Hodgkinson’s article on scenario planning discusses the role of scenario thinking in attenuating biases.

And Philip Tetlock’s work on Forecasting in Superforecasting, Crown, 2015, develops mental tools for improving the accuracy of forecasts (here mainly over the near term) which coincides with Japanese results above – diversity leads to better results. An HBR article summarising it is .

To find out more, SAMI is running a number of training courses on aspects of foresight throughout the year – details can be found on

Written by Gill Ringland, SAMI Fellow and CEO.

The views expressed are those of the author and not necessarily of SAMI Consulting.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at and/or browse our website at

Moving the Financial Resilience debate forwards

May 17, 2017

Now that the dust has settled after the consultations on the Green Paper and the new single financial guidance body (SFGB) it is time to look forward to how we can make progress towards making the households of the UK resilient in the event of sickness absence.

The facts are stark. 1.8 million people are off work sick for more than 4 weeks in any given year; 70% of longer term absence is in those employed by SMEs and 60% of absence is accounted for by women.

Yet 2016 MAS research shows that over 16 million people have savings under £100 and only around 3 million people are covered by IP bought by themselves or their employer. The scope for growing this market is huge.

So what next. First we need the Government to set up a high profile task force to support increased household resilience and make people aware of the options that are open to them.

The task force should be broad based and besides government it should include MAS (and the SFGB when it comes into being); employers; distributors; the FCA; charities; health and rehabilitation providers and NHS commissioners and insurers.

The creation of such a task force would fit well with the SFGB if the new body were to be given a statutory objective to improve household resilience against income shocks.

This should include those who are just about managing now plus others who are managing now but would not be able to do so when an income shock hits them.

Analysis of data from LV= shows a third of IIP polices are held by people earning below the national average, with 60% being held by basic rate tax-payers. This belies the myth that IP is only suitable for rich people.

The Government and the SFGB need to take pro-active and concerted action to achieve a step-change in resilience through national leadership to bring together the many agencies, businesses and third sector organisations that can play a role and to use their independence and authority to communicate the need for people to plan for income shocks, to signpost them to services and provide information and tools to help the public understand the risk and how to plan for it.

The Green Paper was right to seek views on how to increase take up of group income protection but they must also embrace IIP because even if coverage of Group Income Protection is extended it still will not always reach important groups such as the self-employed.

Second we have some important technical issues that need to be addressed. For many ordinary families, the benefits system cannot cover all their commitments.

Millions have mortgages or rental commitments beyond what the benefits system can cover, or other commitments/expenses which cannot be catered for in a taxpayer -funded system.

But the New Policy Institute (NPI) report illustrates how the new rules coming in for Universal Credit treat many people with IIP less favourably than the system they replace.

Families with children and people who rent are hit particularly hard as the ‘disregards’ and ‘tapers’ which help them in the legacy system are being withdrawn. This interaction is not a minor or theoretical issue.

As the State withdraws from paying any benefits to cover mortgage interest, any element of an insurance pay-out used to cover mortgage payments should be completely disregarded in the benefits system.

It seems irrational and self-defeating to remove the existing disregard for such payouts and treat them as available towards ordinary living costs.

A similar approach could also be applied to tenants. For example, any element of insurance which covers their ‘’excess rent” could be fully disregarded by the benefits system. (By ‘’excess rent” I mean the amount of rent that can’t be allowed by the benefits system because it exceeds a local or national cap).

Another option might be for people to be able to ‘’opt out” of drawing any state support for housing and in exchange the State would disregard any insurance payout they receive to cover their rent.

The graph below which was included in the NPI report shows the huge growth in generation rent following a long period of stability.

The rise and rise of 'Generation Rent'

Finally a taper and partial disregard on insurance payouts to meet living (as opposed to housing) costs should be introduced.

A logical starting point here would be for the ‘’earned income” taper and work allowances to apply to Income Protection in the same way as they do to Group Income Protection.

The reality is that both IIP and GIP involve putting aside a small amount of earned income to make prudent provision for future loss of earnings. In the case of GIP, this is facilitated by the employer whereas IIP is set up by the individual.

There seems no equitable reason why the latter course (which is the only route available to the self-employed and millions of other workers whose employers do not offer GIP) should be treated as less worthy than the former.

There may also be advantage in offering a specific new disregard on Income Protection payouts.

This would give a very clear message that it pays to make prudent provision – a message that is all the more important in the IIP setting as it requires the individual to make an active purchasing decision.

And for low income households a very simple basic policy which provides a fully disregarded sum would be extremely cheap and have significant impact on their wellbeing.

Later this year we can expect to see legislation to create the SFBG and a White Paper, with detailed proposals taking account responses to the consultations. I do hope we can look forward to some good news.

Written by Richard Walsh, SAMI Fellow and first published in Cover magazine, March 2017.

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The Many Futures of Life Insurance

May 10, 2017

There is only one past but there are many futures. Which one of the many possible futures develop is impossible to predict for certain but that should not stop us from speculating. Besides, the best way to predict the future is to invent it. So, what can we invent, or at least prompt into being?

We are in a time of great disruption and I could pick several drivers of that but in this blog I am going to concentrate on just three: demographics, consumer expectations and evolving technology.


There is significant societal change under way. According to the UN population growth is set to reach 11 billion by the end of the century. There is growing wealth, and not just in the West. The proportion of society classified as middle class is growing across the globe; the Brookings Institution estimates that there are 1.8 billion in the middle class, which will grow to 3.2 billion by the end of the decade. By 2030, Asia will be the home of 3 billion middle class people. It would be 10 times more than North America and five times more than Europe. The Middle Classes are responsible for the greatest consumption of financial services. Insurance products, particularly health, accident, illness, replacement income etc. are predominantly the province of the middle classes.

The shape of society is changing too; we are all getting older. One third of babies born in the UK today are expected to live to 100 with the global number of centenarians projected to increase 10-fold between 2010 and 2050. An older generation will require a different set of insurance products, both protection and wealth related, than a younger one.

We also have increasing urbanisation. In 2007, for the first time in our entire human history the tipping point was reached when more people lived in cities than outside. This brings burdens in exposure to greater pollution, more demand for social services and the greater threat of spreading pandemics.

The societal changes mean that new demands are growing for a new range of insurance products in the wider Life sector. Health, longevity, support for illness and disability, time out of work and a wider range of assets to grow and protect mean that the Life industry will have massive opportunities to create products that serve this new range of demands. The way in which these products are structured, delivered and serviced will have to change to keep pace with rapidly evolving consumer demands; and this will bring a range of threats to accompany those opportunities. New, consumer and service-oriented businesses will be able to invade the Life insurance sector with innovative modes of engagement and collaboration that insurers have traditionally shied away from or stumbled over.

Consumer Expectations

Consumers have got used to a world in which always-on, direct access to personalised service is seen as normal, not something they should be grateful for. Consumer demands – for accessibility, transparency, responsiveness – will form a baseline for expectations for insurance products and services. Where traditional insurers are unable to meet these demands, new companies will step into the life insurance value chain with supplementary services that enhance and even obscure the older, more traditional insurance business models of engagement. If insurers are not to lose out on new revenue streams and value components they will have to compete, form alliances with or buy these new organisations.

Technology is an obvious participant and driver in this process. It’s common knowledge now that we all have far more power in our smartphones than the whole of NASA had when it sent men to the moon. That massive rise in capacity creates an almost unimaginable, exponential rise in capability. The Digital phenomenon will enable and drive capacity and expectations. The general insurance sector is already making use of personalised, real-time data to create dynamic policy premium calculations with such wonders as telematics in cars that can detect driving habits as well as distance and the type of roads used. The rise of personalised digital devices that can record health and activity measures will be used by life and health insurers to create innovative protection products that can take into account more and more detailed aspects of an individual’s personal circumstances. Insurers may be able to underwrite individually based on thousands of variables.

Life, disability and health products will be able to take advantage of a range of immediately accessible on-line services and mobile apps that bring the consumer directly in contact with the service provider, be that the insurer itself, one of its agents or collaborators, or the third-party service providers that the insurance pays for, such as home helps, physiotherapists, doctors etc. The consumer will expect these and the insurer – if it wants to stay in the game – will either provide them or facilitate them, becoming the hub for the delivery of services arising from a claim.

Brave New World

So, which future will we see evolving? As I said, we cannot be certain – at least of the detail, which remains a little blurred – but the broad sweep of history unfolding before us is coming into focus.

In my view the characteristics of this new world, brave or timid, will include the following:

We will see much greater commoditisation and transparency, alongside increasing personalisation. There will be tighter margins driving business models to control costs with automation, digitisation, prevention through wellness programmes and incentives. Insurers will develop new products for ‘seniors’ and other affinity groups will arise – self-selecting niche groups which negotiate terms for their members. We will see more flexible products; the GI sector may lead but Life will follow with looser subscription based products whose coverage fluctuates according to changing circumstances.

There will be a heavy reliance on data and analytics with much greater automation and use of algorithms.

I have avoided the Brexit Elephant in the room. No doubt the deals that are negotiated will bring all sorts of challenges: over passporting rights, data protection equivalence, solvency parity, etc. It makes the future, at least in the UK even more uncertain, but that is a topic for another day.

One thing we can be sure of is that change is the only constant. As the philosopher Heraclitus said as long ago as the 4th century BC, “No man ever steps in the same river twice”.

Written by Graham Newman, Independent Insurance consultant.

The views expressed are those of the author and not necessarily of SAMI Consulting.

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