By Tammy J. McInturff

Society is going to be reshaped by certain technology innovations and companies that aren’t prepared will get left behind. Leaders can better prepare for the future. Dr. James Canton, CEO, Institute for Global Futures, and author of Technofutures, gave LOMA Systems Forum attendees a glimpse of the future of technology as he discussed the top technologies and trends that will reshape opportunity for life insurance companies.

According to Canton, the current business environment is one of uncertainty, and increased complexity, with both known and unknown risk factors. But at the same time, Canton says there is tremendous optimism in expecting that we will move more towards a known environment where there will be upside and potential opportunity for growth and risk management with a new perspective.

There are expectations for what kind of work styles you may have in the future, for how long you think you might live, and the quality of your life. The future may reset the clock on certain givens we have today. Dr Canton explained that, "one given we have is that one out of four men past the age of 70 will suffer from Alzheimer’s. Given this situation, most would pay a large sum of money to get their memory back." This is where technology is headed. Lifestyle enhancement is going to be the largest revolutionary marketplace in the 21st century. These advances could one day allow people to live an extra 50 years with the vitality of a 25-year-old.

Dr. Canton explained that the insurance industry sits in the middle of a convergence of a variety of trends. These are trends that have not always been tied together. Canton challenged attendees to think about how some of these trends might affect them. "Some of the things General Motors and Ford are looking at represent a convergence of trends that they weren’t thinking about even two years ago. GM’s next generation of business strategies has to do with creating a hydrogen infrastructure so that they can get into the power business," Canton said. He challenged the technology experts in the insurance space to think about a variety of new strategies, business models and convergence of trends that may be totally outside of the life insurance space. He explained that these should be examined for lessons and opportunities to be able to leverage or integrate what is happening in the auto industry or computer gaming space.

According to Canton, the entire game space is now worth 9.5 billion dollars. It has now surpassed the optical sales of movies. So this is a market for other vertical markets, such as healthcare, transportation, and financial services.

One of the most critical aspects of the future, according to Canton, is your ability to have real-time agility. Are you change ready? Is your organization change ready? "There has recently been a lot of criticism of CRM efforts, knowledge management efforts, and other efforts that are attempting to take and leverage the Internet toward greater productivity enhancement. This failure, particularly of CRM, is being held as another artifact of the dot-com thing, which I think is misplaced," said Canton. "Part of it has to do with the inability to change the culture. You can’t layer in knowledge management, CRM, or even enhanced distribution data warehousing without changing the culture. This is something that companies are learning very slowly and painfully as they are throwing a lot of money at various applications."

Companies also need to consider their ability to diagnose the change readiness of their culture—not just the IT culture, but the overall enterprise culture. Your ability to diagnose the readiness of your culture, determines if they are ready for a particular deployment. According to Canton, having a culture that is ready for this change is more important than what you are going to deploy. Why? Canton explains, "having seen IT innovation, after innovation, particularly in financial services, one of the key elements of disfunctionality, lack of integration, or failure is because of a cultural misfit."

There have been dramatic changes in the past five years, but the biggest change is because of the exponential growth of technology and the insurance space in particular is pressing the marketplace.

Aging babyboomers are driving change. There are 78 billion people in the babyboomer generation. Canton explained that these boomers want vitality, mobility, and constant capability. So the boomers, with the largest concentration of wealth on the planet, of any demographic, historically over all time, are setting the stage for subsequent generations. Generation X and generation Y are going to want the same kind of health enhancement, technology innovations, and choices.

So how will individuals living longer and healthier affect insurance? Canton believes the effect will be dramatic. "It is going to bring us into an opportunity for tremendous abundance of different kinds of products and services," explained Canton.

On the technology front, Canton discussed four specific things that will affect business in the future—pervasive next generation of the Internet, the emergence of smart environments, the post-genomic health space and the emergence of the real-time enterprise.

Dr. Canton and his associates do a lot of different kinds of research to come up with these trends. They use a process called "future analytics," which looks at different kinds of value drivers together. "The combination of different trends, technology, demographics, market factors, and competition, together represent a particular trend, not just one particular thing," said Canton. "There will be a 300 percent increase in terms of broadband this year alone in North America. China, the fastest growing in sells of wireless, will have an 80 percent increase this year; but that by itself does not make a trend." Trends are the combination of different value drivers together.

The four power tools of the 21st century are information technology, cognitive science, biotechnology and nanotechnology, according to Canton. Nanotechnology is the manipulation of matter at the atomic level. "This is important because right now we are spending 800 million dollars of taxpayers money this year on a national nanotechnology initiative to create next generation healthcare," said Canton. "Next generation healthcare, plus the developments in genomics are going to exhilarate peoples’ lifetimes, disease prevention and health promotion and smaller, more intelligent devices will be emerging."

The convergence of these four technologies will have a great impact on the life insurance industry. "When you combine the impact of all four of these, what you end up with is a very different marketplace and a very different life insurance industry," Canton said. "When we have a post-genomic society where everybody knows their human genome and we have the capacity to analyze that genome, we will be able to have a new era of personalized medicine. At the same time, we will have a very different perspective of the health hazards and risks associated with each individual."

There will be a major impact on insurance that will change the life insurance industry when personal genomic information is available, not just from a care point of view, but from a health and performance enhancement point of view. "When you combine post-genomic medicine and Web centric solutions with this knowledge explosion, you end up with not just a different breed of health care, but a different breed of insurance," Canton said. "And I would forecast, as a futurist, that there will be a variety of new life insurance products and services offered around individuals who are willing to disclose their genomic profiles, take more responsibility for their health in terms of health promotion and for those individuals who are willing to attend to their risk factors and help manage them. We are beginning to see this today with the advancement of medicine. If you are on cholesterol medicine, such as Lipitor to manage your cholesterol, the chances are good that you will live longer than somebody with your same risk factors that is not. If you are willing to lose weight, stop smoking, or modify your drinking, there is data that suggests you will live longer." So the life insurance industry will go through an evolution based on the convergence of these four power tools.

The 21st century organization is much more concerned with knowledge network enablers. It is important to develop a capacity to anticipate what the emerging needs are. So the notion of IT enabled business agility goes to the changing roll of the technology executive. "Technology executives used to just be concerned about increasing productivity by deploying a particular system," said Canton. "But I think the more important uptrend is going to be in establishing competitive opportunity. IT can be leveraged for creating competitive advantage. You want to look at not just growing or sustaining existing marketplaces, but looking for new customers and new business opportunities that didn’t exist before."

IT enabled products and services can open up new horizons. "Some of this goes against what an IT executive has been developed to do. Being in the technology space you may not be associated with diagnosing market research or looking at competitive analysis. IT is going to become the key competitive weapon in the 21st century, particularly in financial services. The IT leaders who know how to look for new models, do competitive analysis, and create new kinds of transaction engines will be ready for the 21st century," Canton said. "These IT executives are real-time architects of opportunity because much of what they will be doing is enabling collaboration across the enterprise; and ultimately it has to be customer and market centric. Even if you are just responding and being reactive to another part of the operation, this, as far as I’m concerned is the reality check of whether you will be around in the next 36 months, given all the activity that is going on in the marketplace."

What are the transaction values? What are ways we can optimize transactions, speed, knowledge, visibility, and decision analysis? "We want to be able to not only react to situations faster, but anticipate things so that we can turn the battleship and be able to win the war. What are the ways to be able to do that? In financial services, given the comodification of products constantly in demand, the cycles are no longer three years, or three months, but sometimes three weeks," Canton said. "Having the right kind of smart infrastructure that can be agile enough to turn on a dime, develop, deploy, react, competitively reposition, and completely open up new markets and opportunities is where the action is. But you can’t get there without having the right culture that is ready for that. Increasingly, the people who are the most innovative in financial service organizations are those in IT, so that doesn’t work. It doesn’t work to be the high priest of innovation without spreading that throughout the enterprise." Implementing a high innovation deployment to a low innovation operational culture doesn’t work. So the IT leaders challenge is to infect the rest of the enterprise.

IT for competitive advantage is the real opportunity for the 21st century insurance company. The challenge, according to Canton, is to find ways to empower the customers we have today and prospects we have tomorrow with greater ways to understand how to manage their risks and lifestyles. The goal is to give them greater value. These may take the form of Web portals. "Web services that are emerging right now are creating these personalized portals that will live in mobile environments, on these sensor chips and be embedded in different kinds of products that will talk to you. I think Web services is a very exciting area," Canton said.

"I think life insurance companies need to make the migration from legacy systems towards a new infrastructure that is more nimble, agile and proactive. This is something that many insurance companies are not doing. There are many new products that will be built out of this, once a new infrastructure is put in place. As life insurance companies update their IT infrastructure, they are going to be able to have more real-time data capture. In terms of technology, the 21st century life insurance company should be concerned with how to get the right information to the right people, at the right time, in order to better compete." Better competition may revolve around how you utilize your IT infrastructure to understand your customers better, and provide services and products to enable and empower their needs.

So knowledge visibility, reaction time, and predictive analysis of opportunities are all crucial to creating competitive advantage. Also not thinking like life insurance companies have in the past, but thinking more like consumer marketing companies in the future is important. "Looking at different cross-platform opportunities to both market life insurance products in nontraditional competitive ways is an exciting opportunity for life insurance companies," said Canton. "Thinking like a consumer marketing company may open up a universe of opportunities well beyond the life cycle of life insurance. I would forecast that life insurance marketing and product development will change dramatically, exhilarated by information technologies, post-genomic medicine and some advanced technologies that can be delivered to basically empower customer lives for better quality, convenience and time management."

Much of the services that technology will provide in the future will require a great deal of collaboration according to Canton.

Canton explained that self-evolving adaptive networks are coming; collaborative virtual workspaces will emerge, and knowledge engineering that is specifically designed for the customers needs and demands will emerge. "By 2005, one billion people will be online, most of them wireless. It will be the first real electronic market space. Also by 2005, 70 percent of all customers will be buying online. So, the way insurance is sold may change," Canton said. "I may get 25 percent off a particular policy configured to me because of my genomic profile. Sharing my genetic profile with certain companies may give me advantages or leverageable opportunities, which change my risk profile—for example, if I have precursors to hypertension or cancer. We are just at the edge of a society where we will have, over the next five to eight years, the capacity to do personal genomic scanning."

Pervasive collaborative networks also are coming and increase in broadband is only part of that. In the insurance space this will have a direct impact on your ability to offer certain kinds of products and to compete. New opportunities will be emerging with this wealth of post-genomic information. How you leverage it is up to you.

Collaboration drives competitive advantage. What does that mean for your enterprise? How might you be proactive in driving enterprise-wide collaboration? What from an on-demand or real-time environment do people need to have? Does wireless fit with your demographic? These are questions you need to be able to answer.

Technology is being impacted by the war with Iraq and the current state of the economy. Canton explains that many technologies that companies have been talking about deploying or even developing are now going to be exhilarated due to our current economic situation and the threat of terrorism. Security technologies in particular will be exhilarated. "Security is an area that, particularly in the financial services industry, has not been taken as seriously as it should be," Canton said. "So the very fact that terrorism and the globalization of risk are now coming to our door means that corporations will need to invest faster and deeper resources in security. Along those lines at the same time, the technology infrastructure, particularly some new innovations, whether they are wireless or Web services, will need to be exhilarated as well. As companies become more agile, real-time and on-demand, they are going to need to make a transition faster from a legacy infrastructure, towards a more transformational IT infrastructure that can support quark processes but can also enable better competitive advantage. So technology is going to become more of a strategic asset for every organization to support because of the pressures and risks associated with terrorism."

Also, the building blocks of the next economy are going to be based on neurons and genes—not just steel, oil and traditional kinds of commodities. "From an economic perspective this is going to make the Internet economy seem small from the point of view of personal life or in terms of a vertical from financial services," Canton explained. "Your ability to understand this up-trend and leverage it could be massive."

There is a changing social landscape. It is not just about emerging technologies, but emerging technologies that are being driven by social lifestyle and a geopolitical environment. The geopolitical risk since 9/11 is very high and increased geopolitical risks are on the horizon. Security as a product or a process deliverable will become more important.

"We want to look at where we are going, and at what has happened in England over the past 15 years," Canton said. "You are going to see a lot more video surveillance and restriction. We will trade a lot of what we have taken for granted over the past 100 years, which is our freedom of movement, mobility, and access, for more restrictions. But we have found, particularly over in Europe, where there are more video cameras, there is less crime. Get ready for not just electronic security issues, but also physical security issues. For terrorists this is a war against modernity. Terrorists want to attack the engine of our economy. The part of our economy that is in their sites is financial services because that is the infrastructure that is going to drive opportunity and productivity. The issues are no longer should we do this, or should we do that in terms of security. In a recent survey of 280 CEOs after 9/11, less than 10 percent had made any real investments in changing their environment in terms of security. Companies aren’t doing enough."

The future will bring increased risks and security concerns. In a future broadband environment, where more things get connected—databases, warehouses, customers, we are going to have more cyberjacking.

Dr. Canton believes that insurance companies could do a lot more in terms of security.

"Insurance companies should focus less on understanding security, and more on the larger new emerging paradigm of risk management. We used to think about risk management from an insurance perspective as just having to do with financial risks but now there are human capital risks, geopolitical risks, and technology risks. When we combine these risk factors together, then we will be reinventing the paradigm of risk management." Every insurance company needs to go through this learning process to reinvent the paradigm of risk management, because it will lead to new products and services for their clients, as well as new growth opportunities in this post 9/11 world.

Recognizing these growth opportunities is the challenge for insurance companies. Customers are driving change based on their needs, and changing behaviors, according to Canton. Customers are scared and insecure. They are more concerned about the economy and stability. Insurance companies will need to explore all avenues to create new products that fit consumer needs. Canton believes that insurance companies are already failing to meet the customer’s changing needs. "I am absolutely amazed that there is not more personal safety insurance available after 9/11," Canton said. "I can think of five or six different products that should come out of being able to insure my life given that trend. I’m not suggesting that I want to buy terrorism insurance, but I am suggesting that the notion of security as a package deliverable for the insurance space has some how been missed."

The fusion of entertainment with a broadband rich environment may bring a variety of products and services that can be configured for the customer. The future online buying environment will be interactive, allowing customers to purchase products from a virtual customer service representative that can verbally communicate with the customer in real-time.

These changes are coming in the near future. "We have already sold off the current TV spectrum for interactive TV, which is going to be rolled out over the next 36 months. We have two companies that are rolling out satellite distributed broadband over the next 15 months," Canton said. "These technologies will provide lifestyle and workstyle choices that were not there before. For example, when you have distributed broadband, wireless or not, telecommuting becomes more possible for people that are concerned about security and travel. The question is how could you get in sync with these trends now? Because, I would maintain that future innovations will drive competitive advantage."

Companies need to be prepared for the future because innovations will come much faster and disruption will come much deeper. One analogous marketplace is the music industry. The music industry wasn’t prepared for how emerging technology might affect their business. "Over 150 million people downloaded songs from Napster and other similar Web sites," Canton said. "The music industry didn’t know how to capitalize and leverage that technology. So they could only crush it, which is only a temporary solution because it won’t go away. Now the movie industry is terrified of having the same thing happen to them."

There is no doubt that wireless is going to be a prominent part of business in the future. But is wireless access is going to be important to the life insurance industry? In terms of reaching the customer where they are in the marketplace, wireless will be important; but Canton says that does not mean that you need to have all of your insurance information available on a wireless device today.

Wireless mobility is merely a lifestyle and productivity enhancer. "I think that I would caution life insurance companies from spending a lot of money in achieving mobility portals for life insurance products that may not require that degree of nimbleness or real-timeness," Canton said. "If you think about life insurance in the future in a more expanded way, then mobility becomes a portal. For example, in a future scenario I might be willing to give my loyalty to an insurance company that gives me frequent flyer points for buying different products. Or I might buy from a company that gives me a certain percentage off on my life insurance policy because I am willing to modify my risk factors based on my genomic profile. The insurance company may offer an annuity product, a series of financial annuity products or financial management products that are tied to the rest of my lifestyle." So insurance companies may view mobility or wireless devices as ways of being able to stay in touch and manage the customer relationship. Companies that understand this cross-platform emerging world, where most devices will be mobile and tied to the Internet, will have an advantage, particularly in terms of corporate identity, marketing and branding.

With future IT trends, embedded intelligence will be everywhere creating pervasive smart spaces. "With smart sensing technology, chips will be embedded in every product, every environment, including ourselves and they will be able to communicate with each other. A simplistic example is a radio frequency or RF chips that are embedded in tires. These chips would allow you to locate those tires. So, we would know where those cars are and we would be able to plot them with a GPS (Global Positioning System). RF chips could also be placed into jewelry, watches, and clothing. This will be possible by combining RF chips with nanotechnology, where these chips are now at the nanoscale, 100,000 times smaller than the head of a pin. In other words, every product that is manufactured for the purpose of inventory control, and security could benefit from these chips," Canton said. "Corporations could also gain a better understanding of how consumers are using different products. Once these chips start to communicate, we are going to have a very different kind of environment where products will start to think. They will start to communicate and share information. The purpose of these chips will vary. You may want to have an RF chip implanted in your child’s watch or jewelry as an added security device incase they are kidnapped or lost."

"At the same time, these sensing chips will be used to be aware of and smell for toxic substances, biowar hazards, or environmental hazards," Canton said. "They will have a variety of different purposes, but they will be shaped around our lifestyle. Smart sensors will be utilized to help us manage both risks and opportunities in the future and that future is actually emerging over the next 15 months."

The next generation of the Internet will be global and evolutionary. Canton believes it will be about different kinds of Internets within Internets, and networks within networks—some will be more secure and enterprise-ready than others. "Out of the forecast of one billion people generating one trillion dollars by 2005, 90 percent will be accessing technology by a wireless device," explained Canton.

"The real-time economy has emerged and is not just location or context aware, but is going to be more person aware. In a future scenario, Mike could be in New York City and need a dinner reservation. Through voice portals, he speaks to his agent using a device which may be embedded at the nanoscale behind his ear," Canton said. "This device is always present as a gatekeeper of information, knowledge, entertainment, and services. The device will even be able to tell Mike information about sales on products. For example, it might tell him that the kind of ties he likes are available at 15 percent off around the block from his present location." With a real-time distributed intelligent infrastructure many options will become available. Vendors could even offer you gifts in real-time for being a valued customer; such as a bottle of wine at the restaurant you have reservations for.

"You are going to have a morphing of industries in this broadband distributed smart environment. The enterprise itself is going to change. The key words of this converging new environment are real-time, on-demand and active."

Although much of this technology may seem to be in the extreme future, some of these changes are starting to show up now. Canton believes that over the next few years, particularly as domestic growth and broadband increases, we are going to see emergence of post-genomic medicine. "We are actually just starting to see the emergence of post-genomic medicine now; but I think on the short end we are looking at three to five years, on the long end, six to eight years. We have already received the convergence of some of these powertools, such as genetic algorithms, nanochips, and Intel ability chips that are based on genetic algorithms. IBM is researching autonomic nervous systems and Motorola is building systems based on DNA ecosystems."

The life insurance industry must evolve given the developments of IT, biotechnology, nanotechnology, and cognitive science. "Companies need to understand these emerging technologies and prepare today to meet the challenges of the future. The companies that prepare the fastest in recognition that these changes are coming, are the ones that will benefit the most," Canton said. "There will be winners and there will be losers." The question is, which will be your company? And what can you do today to prepare for a fast emerging future of extreme change, as well as risk and opportunity? That is the question insurance executives should be asking themselves. How can we develop a better capacity to anticipate change?

There is still a lot of resistance around understanding the strategic role that IT plays in creating new business opportunity, new growth and competitive advantage particularly in the insurance space. IT is still viewed as productivity and cost effectiveness advantage, verses competitive advantage in terms of new growth opportunity. There is learning yet to be done.

So what is Canton’s advice for the IT professional in the life insurance industry? "Up to this point IT has mostly been used for cost effectiveness, efficiency, and productivity, but the future of the IT professional in the insurance industry will increasingly become more driven by competitive advantage. What are the new growth areas in the marketplace that are interesting from a product and services point of view? What are ways that you can enable customers to be able to accomplish more? How can you become more of an asset within the organization not to be just reactive, but to be proactive? You need to be able to identify new opportunities that are outside the box of what your organization has been thinking about, in order to move the company into new growth areas and expand your existing areas at the same time," Canton said. "The technology executives that are going out and being proactive and anticipating opportunities that are both competitively interesting, as well as are taking customers into the future, are the IT executives that will bullet- proof their careers for the 21st century. Those executives will become an asset for their company’s growth and future."