On January 1, 2000 the global economy was peaking, with booming stock and labor markets.
The Internet was changing everything from how consumers bought insurance to how aircraft
manufacturers bought supplies. Then, the dot com boom quickly went bust and terrorists
attacked the World Trade Center. After an extended slump, western economies recovered
from these shocks and reached new peaks in mid-2007, only to crash again in the most severe
economic downturn since the Great Depression. Unlike previous cycles, emerging economies
quickly recovered from the financial crisis, but developed countries are still struggling to get
back on their feet.
These events have profoundly affected the psychology and expectations of people around the
world. The past decade has seen unprecedented social, technological, environmental,
economic, and political (STEEP) changes (see Figure 1 below). These changes have affected all
global insurance sectors, including personal lines, commercial lines, individual life, annuities
and retirement, and group benefits. Some of these STEEP changes are likely to continue and
even accelerate over the next decade. For example, the rise of virtual communities via social
networking, the exponential growth of mobile internet, the increasing sophistication of
Internet tracking that generates real-time data, and the analytics that transform this data into
insights already are shaping how consumers obtain advice on and purchase insurance
products, as well as how carriers underwrite, manage and transfer risk, and proactively
reduce losses.

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PWC PriceWaterhouseCoopers

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