By Srivathsan Karanai Margan
The Death of
How an interconnected
ecosystem can address
In insurance, moral hazard is the idea that a party that is protected from risk will behave differently than they would if they lacked that protection. It has always been difficult to track moral hazard and initiate preventive mitigation measures. Insurers have traditionally
adopted risk control techniques and restrictive practices
to mitigate the impact of moral hazard. But in an interconnected world, insurers will be able to accurately
track moral hazard in real time, potentially resulting in
changing moral hazard from being a lagging indicator
into a cutting-edge leading indicator.
New technologies, including the “internet of things” (IOT), Big Data, cloud
computing, and artificial intelligence (AI), are disrupting businesses and serving
as a fertile platform for many new business models to evolve. IOT is especially animating many of the devices around us, feeding data pipelines with real-time data
and creating a connected ecosystem. As it permeates, this connectedness is causing
fundamental changes on existing businesses—and obliterating a few in the process.