Get Ready for the Fourth Industrial Revolution

May 24, 2017| By Charlie Kingdollar | P/C General Industry, Commercial Umbrella, General Liability, Property | English

The fourth industrial revolution - or Industry 4.0 as it’s also referred to - has begun, and it’s going to create enormous socio-economic change around the world. Advances in automation, artificial intelligence and robotics will bring job losses on a huge scale as businesses exploit “cyber physical systems” to cut costs and improve efficiency.

IDC, the global intelligence firm, predicts that company spending on artificial intelligence technologies is expected to grow to $47 billion in 2020 from a projected $8 billion in 2016.1 Business Insider believes that enterprise robotic shipments will nearly triple between 2015 and 2021.2

The pace of change is going to be frightening and challenging for many. A January 2017 report by McKinsey & Company stated that almost half of all job activities in the U.S. could already be automated “by adopting currently demonstrated technologies.”3

Outside of the U.S., the number of routine jobs that could disappear in emerging economies as a result of Industry 4.0 is even higher. An ILO (International Labour Organization) study found that 88% of workers in Cambodia’s textile, clothing and footwear sectors face job disruption due to body-scanning technology and 3D printing; 86% of workers in Vietnam and 64% in Indonesia are at risk.4

It’s a similar picture across other sectors, from manufacturing to mining; white collar jobs will not be immune either. A Japanese insurance company recently replaced 34 positions - roughly 30% of its claims staff - with AI. According to an Oxford University study, “insurance underwriter” is among the professional services occupations most likely to be automated.5

Clearly, insurers need to understand which classes of business are likely to be disrupted by the growth in robotics and intelligent networks. There are many underwriting/rating issues. For example, property values for enterprises adopting robotics will increase as they purchase expensive equipment to replace workers.

With fewer workers, it’s possible that a lower number of occupational injuries will have an impact on Workers’ Compensation results, but there would also be reduced premium volume.

These are obvious examples. But what about product liability arising from robots gone awry? With automation increasing productivity, will business interruption claims and costs potentially increase?

At Gen Re we are already preparing for the economic shift that robotics and artificial intelligence will bring. It would be unwise to make confident predictions, but we’re convinced Industry 4.0 will significantly alter book composition, and we are monitoring those classes of business that might be affected first.

If you want to know more about the implications of Industry 4.0 for the insurance industry, see the April edition of our Insurance Issues. Or get in touch directly.


  1. Worldwide Cognitive Systems and Artificial Intelligence Revenues Forecast to Surge Past $47 Billion, IDC, October 2016.
  2. Market forecasts, growth drivers, and the industries leading adoption, Business Insider, July 2016.
  3. Harnessing automation for a future that works, McKinsey & Company, January 2017.
  4. Robots threaten millions of jobs in Southeast Asia, ILO, September 2016.
  5. Robots taking over jobs: Underwriters most at risk, Insurance Business, February 2017.