Eyes wide shut – the world is sleeping less
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Consider these two facts: Firstly, two out of three man-made losses worldwide are due to human failure. Based on Swiss Re’s sigma research, this would mean that people trigger a loss volume of USD 3 billion per year. Secondly, life insurance generated premiums of USD 2.6 trillion in 2017.
These two facts are linked because tired people make more errors and insomniacs are at a greater risk of dying earlier than would otherwise be the case. The lack of sleep is associated with increased rates of heart attacks, strokes, obesity and other diseases. Sleeping less can also contribute to the development of Alzheimer’s. And recent research found that chronic sleep restriction increases risk seeking behaviour.
If these trends change the loss patterns in property and casualty or mortality rates, this could have a multi-billion dollar impact on the insurance industry in the long run.
Moreover, there are indications that the risk is real. The world is indeed sleeping less. Flexible work schedules, teleworking breadwinners holding multiple jobs or making long commutes, mean that people are spending less time sleeping and more time awake. More artificial lighting and new light qualities and technologies (LED, OLED etc.), as well as extensive use of smartphone and computer games, are adding to the problem.
- For Life&Health, a general shift in mortality patterns could result. If incidences of strokes or heart attacks with fatal outcomes increase, more policies would need to be paid out earlier, which would change the dynamics of the whole multi-billion dollar life industry. This must be viewed in the light of other risk drivers which contribute to strokes and heart attacks, such as diet or lifestyle.
- P&C business could be affected by the fact that more mistakes can occur through human action in sensitive work environments such as oil rigs, operating theatres, professionally driven vehicles (e.g. aircraft, trains, buses) or medical professions. This, in turn, can lead to an increase in frequency or severity in the affected lines of business. Some examples: for industrial facilities this could mean more man-made losses such as explosions. In the medical context, such human failures could lead to an increase in medical malpractice claims.
- Motor liability in general could face changing loss patterns with more tired drivers at the wheel.
- Fatigue affects performance and well-being of workforce also in the re/insurance industry.