4 December 2019

By 2050 we could all be captives

Captives could cease to exist within 30 years – or could become more widespread, with increasingly detailed and personalised data leading to everyone effectively becoming their own captive, according to Aidan Kelly, associate director at Aon.

Speaking at the Cayman Captive Forum, on a panel looking at how risk and insurance might change by 2050, Kelly said in that time a globally harmonised tax regime could evolve. Alternatively, jurisdictions could become increasingly protectionist, with money forcibly kept onshore. Brokers, actuaries and other service providers could also become redundant as technology automates their jobs away, he warned.

The general message was that almost anything could happen in the next 30 years, and panellists said the only certainty was unpredictability. The extent of changes in the world economy in the last 30 years illustrate the potential for change in the next three decades: the last 30 years have seen the birth of companies like Google, Twitter, Facebook and Tesla. The first mobile phone call was made in 1991 and the first text message was sent in 1992, again illustrating the extent to which the world can change in three decades.

Panellists said the coming waves of technology will dramatically change the way the world does business, and the way risk is insured. It is already clear that self driving cars will kill auto liability insurance, said Jim Bulkowski, advisory senior manager at EY.

The healthcare sector will be similarly affected, as wearable or implanted technology feeds increasing quantities of data to insurers, allowing them to make more detailed assessments of their risk profiles, said Scott Schwarting, senior director of enterprise risk management at R1 RCM.

Kelly predicted pay-as-you-go insurance will become ubiquitous, with insureds using biometric tagging to notify insurers of the exact time they require insurance.

Peoples' work life balance will change significantly, with people needing more insurance for leisure activities as they work less in the future, Bulkowski said.

Kelly noted that Millennials are better at taking risk than older generations, and are more comfortable pushing at boundaries, having grown up surrounded by the technology that has emerged in recent years.

Whatever happens, people will adapt, said Kelly. “The human race has always been resilient, through the dark ages, the stone age, the iron age, the Roman empire and the renaissance,” he said. “The industrial revolution was only a few hundred years ago. Global population has increased from 1 billion to 7 billion in around three generations. Humans can overcome climate issues too.”