In my annual rundown of the year that was, and things to look forward to, I like everyone else have missed far too much of what we love so much but adapted and got on with it, traveling the world from the comfort of my own chair. I also watched our industry go through great highs and horrible lows. Some of that is reflected in this year's predictions as leading indicators as to what we need to do and will fix through 2021 and beyond. I've started recently to use one word to describe 2020 -- quite simply, it was relentless.
Before we get into this year's predictions, as usual here's my scoring of 2020's predictions!
See here for the full predictions. My quick report card is below 👇🏻
- Insurtechs fade away — We have seen some startups leave us this year, fewer than I thought, to be honest. I do wonder how the funding runway survives through 2021. Marks 1/2
- Move innovation externally — I think, given COVID, innovation hasn't really happened at all. If anything, innovation units changed shape and got shut down. Marks 0
- Collaboration slows — I've definitely seen this through 2020, mainly because our focus has been on surviving 2020 and ensuring business as usual (BAU), reemphasizing that some insurers are notoriously hard to work with and slow when it comes to decision-making (note, not all of them!). Marks 1
- Convergence of fintech, insurtech and wealth — I was hopeful for this, but I don't feel it's here yet at scale. We have pockets of examples, when you look to the likes of Revolutl with 10 million customers you can do all three. Marks 1/2
- Invisible and embedded — Still plodding on. This feels like my pandemic or cyber risk item on the Annual WEF global risks report. I'm going to keep it on the list until it actually comes true. An encouraging number of partnerships and new capabilities gives me a generous result. Marks 1.
- SME, SME, SME — I remain super excited by this, globally. Has anyone cracked it yet? Not really. I remain optimistic, based on what I have seen this year as well as the many legal cases this year. Marks 0
- Peak conference — This happened for the wrong reason but still was correct. As we all moved to Zoom, Teams, Meet, etc -- only a few of the great conferences survived online, and with that a welcome collaboration between ITC and DIA. I do hope to get back to them in person in 2021. Marks 1
- Fewer but larger investing rounds — I was right on the money on this one; our research in Q3 proved it, too - read the full report here. Marks 1
- Health — COVID-infused, this trend has just started, and has even more focus going into 2021. Marks 1
- e-scooters will work — Darn it, I hate being right sometimes. Another COVID-accelerated outcome, with trials around the U.K. and more to follow, with them expected to be legalized shortly. They are here to stay. Deal with it, Nigel. Marks 1.
- The year of the electric vehicle. This was helped by the U.K. government bringing forward the deadline to 2030 to scrap petrol and diesel vehicles. A great read here, but sales of EVs are up on last year and continue to rise. We also expect that the U.S. will rejoin the Paris Climate Accord under a the new administration, which will further accelerate the EV trend in 2021. Marks 1. (Don't mention the Apple car yet; still a few years off.)
2020 Score: 8/11 - 73% — I'll happily take that.
2021, Looking ahead - so here goes!
1. Let's fall in love with insurance
If 2020 taught us anything, it is that insurance matters, really really matters! When it doesn't do what you expected it to do, you lash out and claim it's not fit for purpose, it was sold incorrectly or whatever, but you likely didn't read or (if you did) you didn't really understand what you was buying.
The U.K. Business Interruption Test Case is a wake-up call to the industry on so many levels, especially for small businesses. Many other cases are going on around the world, too. Add to that event cancellation, travel disruption and wedding insurance, plus many others that have all kicked into action. Back in April, the ABI estimated payouts to be in the region of £1.2bn in the U.K. Motor insurers across the world refunded premiums. I tracked many of them back in April here, which I found super-encouraging, with many thinking and looking to why insurance is not more of a utility? This was a positive move by many global carriers (but very view U.K. ones!).
A large part of this is that policy wordings simply have gone too far for too long. Regardless whether direct carrier or delegated to a broker, we are out of control, and if we are not out of control then we don't really know in some case what we are signing up to. We need to know what's included and what's not; this is clear across all business lines - more importantly, we need to ensure people on all sides of the table understand policy wording if we are ever to fall in love and build (rebuild?) trust. The SARS outbreak in 2003 had us rethink things and tighten up wordings but not in a uniform and consistent way. In many cases, this is no different from silent cyber or solar flares. For every new event/issue that emerges, we can't keep going back over the same old costly process every time. Wording will come into further scrutiny by regulators in 2021.
2. Education and awareness
To fall in love, we need to talk and engage more. During the pandemic, communication has been consistently poor (see our SME research here). We heard from practically everyone over the last year that we have ever engaged with or given our email address to, other than our insurance company or broker (I appreciate a sweeping generalization, and this is not true in all cases). Net result, we need simplicity and transparency in the industry, and we need to start now.
Communication cant just be about up-sell/cross sell. We also need to look to education and understanding around insurance (and broader financial services, much much earlier). I look at my kids and see they will come out of school knowing about cosines, sines, tangents and many other things, I hope -- but won't know how or why to use a bank account, change a plug or car tire or, importantly in this instance, the purpose and need for insurance, how you mitigate and manage risk.
As an industry, we have improved a lot already, but we have a long way to go, especially if the embedded and invisible nature of insurance takes off as we expect. It's at risk of being further and further away from the consumer's or business owner's mind.
In 2021, we will see people get smarter and wiser when it comes to insurance. As an unintended consequence, we may see a resurgence in agent and broker channels to support some of the demystification.
See also: 3 Trends That Defined 2020
3. Access to talent
By agreeing we need to address #1 above, starting with #2, we will ultimately have a larger talent pool of people who want to and will come into insurance over the next decade. The fix will take a generation or, worse, multiple generations. But there is an intrinsic link among all three of these, a continuous direct correlation. As our industry relies more and more on technology, partnered up with deep insurance domain, we need more people -- lots more people -- and in today's digital age, when everyone is remote, competition has never been fiercer. Talent pools are now global, no longer restricted to your local area. Your options and competition may be thousands of miles away.
To attract great talent, we need to change the narrative, rebuild trust, make insurance an inclusive and diverse environment and show that we are tackling problems that really matter, from global climate change to keeping businesses moving and people alive and healthy. As a result, we will see more insurers focus on brand and reputation. This was never more apparent for me than recently when interviewing industrial placement candidates for Deloitte; they knew more about and importantly were inspired more by our values, purpose and actions than by our actual capabilities, practices and the client work we do. Reputation will be a key focus for insurers in 2021, with many, including Aviva, already making moves; see here for their most recent appointment around brand and corporate affairs.
Insurtechs such as Lemonade have long focused on their giveback as well as being a certified B-Corp. Randomly, I first wrote about insurance brand in 2015 here.
4. Acceleration vs disruption -- digital indigestion
2020 meant everything was accelerated. The things we thought would take years got completed in months. After all, necessity is the mother of innovation. It was amazing to see the speed of change in an industry that is frankly not known for this.
That said, the change we have seen is acceleration, not true change. We, like many industries, are doing the same things in a digital way. We have not re-imagined, rethought or in many cases challenged what we are doing in the first place or why we are doing it. Zoom, Teams, Google Meet replaced physical, face-to-face meetings. Collaboration tools replaced whiteboards. Online forms replaced paper ones. For many, there is no going back to the old ways of doing things. My point here is that the old and current ways in most cases are the same, just digitized. I truly take my hat off to the many teams that got on with this, worked tirelessly to enable remote working, purchased laptops and remote desktop tools and generally in most cases allowed business as usual.
As we enter 2021, I expect to see an element of digital indigestion. How do we cope with all these things we put in to patch things up? What are the implications? Are these things what the business needs now and in the future? Are they effective and efficient? I expect many of these now to be reevaluated and held up accordingly to see if they will or should survive the test of time. Are they needed still, can they be simplified or changed entirely? Most of this indigestion is purely from a process/technology lens -- and doesn't yet take into account the human element of change needed.
While 2020 was relentless and while we achieved so much, 2021 will in some ways slow this progress down again and force us to re-look, reflect and address the areas where we can truly make an impact.
In our funding review last year here, you see that there were zero net new startups in the first half. Add to that that 80% of the funding went to the top 10 insurtechs; that simply means there are a lot of mouths to feed with very little money left, even if funding surpasses, as we expect it to, that of 2019. Hardly surprising: The world is a very different place right now. Insurtech has matured, some markets and lines more than others. We have seen IPOs from Lemonade and Root (congratulations, Daniel, Alex and respective teams!) with an IPO filing from Oscar Health on the health side. Hello, world! WeFox raised $110 million, Series B, and there is a profitable 2021 ahead. Insurtech has firmly landed on the lawns! Lemonade cruised to a market cap of more than $10 billion!
A whole flurry of new deals emerged in the last few weeks, too, across traditional incumbent players consolidating, carriers buying insurtechs and insurtechs buying insurtechs, including:
- RSA acquired by Intact -- here in a megadeal.
- InsuraMatch acquired by Travelers -- here.
- Brolly acquired by Direct Line earlier in the year -- here.
- Drover acquired by Cazoo -- here.
- Drivit acquired by Zego -- here.
- Juniper Labs acquired by Next Insurance -- here.
- RiskGenius acquired by Bold Penguin -- here.
I expect consolidation to accelerate into 2021 for a number of reasons, from funding runways reducing, insurer decision making slowing and bandwidth to focus on innovation and new tech drastically reducing, given the focus on what 2020 delivered us. I also think the digitization push of 2020 COVID enabled many of the traditional carriers to level up with insurtechs that, while they had a strong initial proposition, were still just a feature of a larger play. Insurtech's dominance for 2021 will focus on those that enable further existing carriers vs full stack competing ones (despite the success of Lemonade, Root, WeFox and soon to be Oscar) or those that have specific communities or niche groups they serve. With the latter, the question will always be -- how do we get to scale still?
6. Healthcare is the real winner in 2021
From listening to customers, colleagues and partners over the last 12 months, I think health is the big winner ahead. As with life insurance, while thinking about mortality and what happens if... we have also turned to our own health. I remember, early on, a U.K. national press headline read something like: Coming out of lockdown, you are going to emerge a drunk, chunk or hunk!
While the industry has moved mountains, we ourselves haven't moved as much, or in some cases at all. This in itself has had a profound impact on our health, physical and mental. Insurers have stepped up and then some in this category, both for our own thousands of employees across the globe, displaced to home, and for customers. I recall listening to Ali Parsa from Babylon Health on Secret Leaders Podcast talk about how pre-pandemic an MD in the U.S. said people would never use telemedicine, and as soon as the lockdown hit there was a gold rush. This to me is the Zoom of our industry.
This year alone, I have done an at-home DNA test with 23andme and a blood test with Thriva, and I keep looking to buy a Whoop Band to give myself more data than I care to imagine (the company raised another $100m in Series E in October). If my healthcare provider could take all this information, I would let them have it in a heartbeat. I'm pretty sure I know more about myself now than they do, which I would love to reverse -- they are the experts. Take all this data and tell me how I can be healthier and live longer; don't wait for my call or claim.
Some proof points for me, beyond the forthcoming Oscar Health IPO, include.
- Physical health with Peloton -- right time, right place, and those who know and follow me already know I'm addicted. The IPO was in September 2019 at $29 per share, now trading at over $150 per share. They just doubled down with a $400 million acquisition of Precor, and now with a market cap of $49 billion. Apple, of course, also launched Apple Fitness as many other gyms, yoga studios and more all turned to Zoom. Those that have vertical integration are still winning, in my mind.
- Mental health with Calm -- now valued at $2 billion, with their latest $75 million investment here showing that mental health is more important than ever and that companies large and small need ways to help individuals manage their mental health.
- Brain health with Heights, from Dan Murray-Serter and his team, recently raising over £1 million in just 20 minutes through crowdfunding. Heights is a new smart supplement, focused on your brain health -- a subscription service that's packed with goodness and a podcast of health experts and brilliant insights with supporters including Stephen Fry, Jay Shetty and Dr Rangan Chatterjee, to name but a few.
- Remote dentistry - Instant Dentist from Aalok Shukla and Lucie Marchelot Shukla and how they are bringing remote dentistry here really surprised and impressed me with the level of engagement and capability of things you can evaluate and see, without ever sitting in a dentist's chair -- music to many ears, I'm sure! Add to this, cosmetic care such as Straight Teeth Direct, also from the comfort of your own home, very similar to Invisalign. Super impressive. Excited to see where this goes.
Finally, Swiss Re's new partnership with Google Verily demonstrates how insurance is further partnering with Big Tech to drive clear benefits for customers -- more here on the recent announcement of a Verily patch. Again, the exciting thing for me is the combination of hardware, software and services in one proposition.
There's actually a great webinar with Bupa led by Mark Allan, chief commercial officer, joined by their new group CEO Inaki Ereno, Dr. Neil Sikka, Dr. Luke James, Richard Norris and James Sherwood, in which some of these issues are discussed. See here for the full replay on digital health insights and where the market may go in 2021.
I'm not sure I should include this in health, but, hey, 2020 and all! -- pet insurance is on a roll! With everyone at home, I just need to look at my Facebook feed, immediate friends and the price of pets, and it seems the entire world has bought a dog (except us; Emma won't let us!). The reason I mention pet insurance here is that I genuinely believe there are a lot of similarities between human healthcare (systems, processes, etc.) and pet healthcare. In the same way that humans have turned to telemedicine, so have our pets with 24x7 video calls to vets and much more. Bought By Many has partnered with FirstVet. Others, including everypaw, have followed suit, offering the same service. I mean, after all, we love our pets more than we love ourselves sometimes!
I should say a huge thanks to the online community for continuing to motivate each other -- Bobbie, Sharon, Nick, Pat, Ed, Chris and many others! We truly have kept each other moving, when some days we never really wanted to!
7. Life and protection grow
Much focus and funding will shift from P&C to life, protection and health. We have seen some of this already with the likes of Dead Happy (making life insurance simple), YuLife (rewarding living) and the InsureTech Connect global winner this year, bequest, which is bringing life insurance, wills and family well being all under one roof! (Another push to simplification and composites!)
8. Embedded and invisible finally lands
While I have been banging this drum for years now, from my narrative on value added services to loyalty, the icing on the cake, the prediction still holds true for me, now more than ever. Simon Torrance recently put together a great article on embedded insurance, well worth a read -- highlighting the $3 trillion market opportunity.
This year, we have seen huge advances from folks like Swiss Re with iptiQ and IKEA, new motor partnerships with Daimler, partnerships with PingAn, back in the U.K. John Lewis partnering with Munch Re Digital Partners and (another) rumored Tesla partnership or insurance launch. That's not even starting on the GAFAs (Google, Apple, Facebook and Amazon) of the world. Traditional insurers creating platforms for partnerships: There is a great example from Nationwide in this video here, as well as others such as the Chubb Studio, described as insurance in a box.
From Angela Strange, A16z: Do you want insurance with that? relates to ecosystems and much more. I had a ton of fun last year helping non-insurance companies define and build insurance propositions (more on that in 2021!) and can only see this trend growing. I wrote about it earlier this year when Amazon launched its Care Hub. Will the winner in the future be those that own distribution and access to the asset, be it the home, car, truck, fleet, ship or building, rather than layers and layers of additional providers? Sure, we will always want choice, but how much - when does convenience and ease take priority when we are already time-poor?
We just need to look at neobanks like Starling, which recently hit 2 million new customers and which has continued to grow both its personal and SME offerings, both including multiple insurance lines from mobile to motor to health and life, almost in line with what I have highlighted above. It's making me think, have I been too short-term-focused or is Starling ahead of the curve?
And that's it! What do you think? Do you agree? Have I missed anything obvious? Focused too much on the short term? Come up with ideas that are too far and can't be true? (I honestly don't think the latter this year).
See also: Has Pandemic Shifted Arc of Insurtech?
Looking for some additional perspectives? Check these out:
As always, many of of my friends throughout the industry make similar predictions. Here are a few of my favorites:
- Martha Notaras, managing partner of Brewer Lane Ventures - 11 Predictions for 2021 - here. I'm 100% with Martha on these, especially "Do you want insurance with that?"
- Matthew Grant and Robin Mertens from InsTech London this year crowd-sourced insurance predictions, with an all-star cast from around the market - a great event to re-watch and look out for the post on soon.
- My old friend Tony Tarquini from Pega not only is as fit as a fiddle but has a great summary in "3 Trends That Defined Insurance in 2020" here.
- Chris Frankland, CIO over at Care Bridge. has posted his year in review here.
- Outside of Insurance, look no further than Kara Swisher and Scott Galloway from Pivot Podcast and their Big Predictions for 2021 here Always good to look outside our own wheelhouse to see how the rest of the world is reacting, and these two are my favorites!
Of course, look out for our own insurtech predictions show in early January with InsurTech Insiders here, which we recorded a few weeks back. Thanks, Hanna, Sarah and Alex.
If one thing has encouraged me in 2020 it is that the community is stronger than the individual and that the global insurtech community brings it by the bucketload -- I'm delighted to be a small part.
Look forward to your feedback, challenge and thoughts as always, as well as seeing as many of you in person through 2021!.