Swiss Re SONAR: New Emerging Risk Insights for 2015
May 2015 (Document available here.)
Challenges of the Internet of Things (p.11)
The Internet of Things (IoT) will revolutionise consumer experience and behaviour as well as the management of organisations and societies. By 2025, it is estimated that a family of four could have more than 100 connected devices while individuals may be in daily contact with 3000–5000 connected things.
The IoT will become the true foundry of big data, but increased connectivity will raise questions about network and data security, resilience and longterm maintenance and software updates. Losses could occur from system malfunctions as well as malicious attacks from hackers and criminals. Concerns focus particularly on patching and ‘secure development’ because security is not the top priority of device developers. There may also be legal and compliance risks as new legislation and regulation on data use and privacy could also come into force in many jurisdictions, with the risk of little coordination and standardisation across countries.
The IoT has significant potential to challenge entire lines of insurance business. There will be many more ways to avoid losses while risk assessment can be improved thanks to the availability of additional data. This could make the physical world safer, reducing the need for risk management and risk transfer. However, other risks may increase in the digital world with people increasingly relying on data and digitally supported processes. In addition, other players such as large technology companies may consider entering the insurance market to capitalise on their enormous amount of data.
- New data streams may introduce new sources of information asymmetry between insurers and consumers
- Hacking and malfunctions could have a significant impact on traditional P&C polices that have some coverage for cyber risks, as well as on ‘pure’ cyber products in both P&C and L&H
- Regulations addressing data availability, usability and privacy could limit the upside potential of big data and make claims handling more difficult
- Accumulation control will be a key challenge for insurers — as well as a key differentiator
The dangers of LED light (p.28)
LEDs are light-emitting diodes frequently used in lighting fixtures for the domestic market. They have a longer life span and are more efficient than conventional incandescent light bulbs and fluorescent lamps, and their prices have declined significantly over the last years. As a result, the market share of LED lighting has increased significantly. This development is likely to continue, particularly as important markets such as the EU, the US or Japan banned some or all types of incandescent bulbs. The global LED lighting market is expected to grow from USD 42.6 billion in 2014 to USD 62.7 billion in 2016.25
The growing use of LEDs has triggered concerns regarding their impact on human health. LEDs emit blue wavelengths which are beneficial during daylight hours because they boost attention, reaction times and mood, but which seem to be most disruptive at night.26 Reading emails on a smart phone or watching movies on a hand held computer, for example, could make sleep more difficult.
Recent scientific studies have indicated that white LEDs could also be problematic, due to the potential risks for the eye.27 Although perceived as white light, white LEDs might also emit a light peak in the blue spectrum. This may result in photochemical injury of the retina, compared with other light sources that have less blue light.28
Considering the fact that LEDs are likely to become the major domestic light source in many parts of the world, there is potential for a serious risk exposure. Billions of conventional lamps will be replaced by LEDs in the near future, and even if adverse health effects are rare, the total number of bodily injury claims could be very high.
- Potential for large serial losses in different markets as there are only a few major players in the light bulb market