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The Path Forward for Insurance Industry

The insurance industry is hundreds of years old and full of ingrained perceptions and antiquated processes, which continue to cause frustration among customers. Insurers know they need to innovate, but the question is – how? How can global insurers, which have been operating in and underwriting insurance the same way for hundreds of years, know which types of technology they need to meet consumer demand and remain competitive in a rapidly changing market?

Insurance technology is the missing link. The insurtech market is growing rapidly, and players have to be prepared to adapt. There is little time to sit idle, because, if you can’t keep up with consumer demands today, there is a small chance you’ll keep up with them tomorrow. Whether it’s the need for small business cyber insurance or the necessity for pay-per-use homeshare insurance, insurance is moving away from the traditional model.

The on-demand culture and sharing economy continue to disrupt industries across music, entertainment, transportation and payments. The wave of acceptance by consumers flags a fundamental shift in consumer behavior, where consumers can get what they want now, without delayed gratification. The insurance industry is the next in line, ripe for disruption. With the continued explosion of rideshare and homeshare applications, the traditional models for car and home insurance are not substantial enough to protect individuals using their personal property as a commercial asset.

See also: Insuring a ‘Slice’ of the On-Demand Economy  

While the battle of insurers vs. insurtechs continues, we firmly believe that both parties have equally valuable offerings to bring to the table. To truly drive the industry forward, an open-source cloud platform that allows insurers to quickly build, test and deploy their own on-demand insurance products will be the beginning of the insurance industry transformation in response to the sharing and gig economy.

Legacy carriers have centuries of experience writing insurance policies and have the historic industry knowledge that insurtechs need to be able to grow – emerging industry players that don’t see that are missing a huge opportunity. On the flip side, technology is changing fast and, therefore, changing the way people work and live. It’s the new norm for consumers to get what they want, when they want it; and while insurers might have the industry knowledge needed to be competitive, what most don’t have is the ability to be agile to protect against emerging risks and meet increasingly demanding customer needs. Largely due to the lack of technology and resources available, our partners tell us there is much higher value in cooperation, as insurtechs have the technical resources insurers need to improve time to market. For both parties, it’s a win, win.

Cloud platforms are allowing insurers to quickly ideate, experiment, test and deploy new, on-demand insurance products. Since making our Insurance Cloud Services platform publicly available in January 2018, we’ve experienced higher-than-anticipated demand, causing us to make a heightened focus on global expansion as insurers increasingly realize the need to adopt agile technology.

AXA XL and the Co-operators both launched their first on-demand cyber and homeshare insurance products in the last two months. Through cooperation vs. combat, the two are now ahead of the curve, with AXA XL’s product being the first ever on-demand cyber insurance product in market, and Co-operators launching the first on-demand homeshare insurance solution in Canada, allowing the company both to reach and work with customers in a way that works for them vs. the other way around.

See also: A New Way to Develop Products  

The path forward for fully digital on-demand insurance is moving quickly, and, as the industry continues to experience disruption, it’s critical that insurers consider not only what type of technology they need to improve internal processes and compete in the market, but also the changing, increasingly in-demand needs of their customers. Insurtechs that are able to provide solutions for insurers that allow them to quickly ideate, experiment with and launch new products are set to lead the future of the insurance evolution.

Will Blockchain End Up Like 3DTV?

When technology is baked into a device, we rarely give it much thought. We buy a smartphone for its utility – not its operating system. Sometimes a new technology dramatically changes how everyone does things; the internet is a good example. Some plausibly great innovations, such as 3D television, just never gain traction. Which of these outcomes will blockchain have?

Recently, blockchain has emerged as a technology that will potentially transform industries in a way similar to what the Internet did a couple of decades ago. Still a nascent technology, its many uses have not yet been discovered or explored.

Most people know a little about blockchain:

    • It lets multiple parties agree on a common record of data and control who has access to it.
    • Its platform makes cryptocurrencies like bitcoin possible.
    • Movement of cryptocurrency verified by blockchain allows peer-to-peer cash transfers without involving banks.
    • Blockchain is a permanent, auditable record, so any tampering with it is obvious.

Some people think blockchain will transform security in financial services and fundamentally reshape how we deal with and trust complex transactions, though this could be a response to hype or a fear of missing out. Many other people ask why and how they should use blockchain.

On the face of it, using a shared (or distributed) ledger to process multiple transactions doesn’t seem so revolutionary. Blockchain is essentially a recordkeeping system. Perhaps its association with cryptocurrency – such as bitcoin – lends it a darker, more enigmatic edge than the software traditionally used for processing multiple transactions. One way or another, insurers face pressure to update antique systems with new ones that can compete with the demands of a digital world, and that means incorporating blockchain technology.

A distributed ledger of transactions

A blockchain can be seen as an ever-growing list of data records, or blocks, that can be easily verified because each block is linked to the previous one, forming a chain. This chain of transactions is stored on a network of computers. For a record to be added to the chain, it typically needs to be validated by a majority of the computers in the network. Importantly, no single entity runs the network or stores the data. Blockchain technology may be used in any form of asset registry, inventory and exchange. This includes transactions of finance, money, physical property and intangible assets, including health information.

Because blockchain networks consist of thousands of computers, they make any effort to add invalid records extremely difficult. Every transaction is secured using a random cryptographic hash, a digital fingerprint that prevents its being misused. Every participant has a complete history of the transactions, helping reduce the chance of transactions being corrupted. Simply put, a blockchain is a resilient, tamper-proof and decentralized store of transactions.

Complex processing and automation with smart contracts

Blockchain ecosystems enable a large number of organizations to join as peers to offer services, data or transactions that serve specific customers or complex transaction workflows transparently. These ecosystems can automatically process and settle transactions via smart contracts that encapsulate the logic for the terms and triggers that enable a transaction.

Smart contracts are created on the blockchain and are immutably recorded on the network to execute transactions based on the software-encoded logic. Transparency through workflows recorded on the blockchain facilitate auditing. Peers and partners within a blockchain ecosystem independently control their business models and the economics without the need to use intermediaries.

Self-executing smart contracts can be used to automate insurance policies, with the potential to reduce friction and fraud at claim stage. A policy could be coded to pay when the conditions are undeniably reached and decentralized data feeds verify that the event has certainly occurred. The blockchain offers enhanced transparency and measurable risk to this scenario.

Parametric insurance, which operates through smart contracts with triggers that are based on measurable events, can facilitate immediate payments while decreasing the administrative efforts and time. Effectively, the decision to pay a claim is taken out of the insurer’s hands. Other possible models are completely technology-based without the need for an actual insurance company. The decentralized blockchain model lends itself well to crowd-sourced types of insurance where premiums and claims are managed with smart contracts.

See also: Blockchain’s Future in Insurance  

Blockchain-based insurance

New insurers using blockchain are emerging and offering increased transparency and faster claims resolution. Here are some examples:

    • Peer-to-peer property and casualty insurer Lemonade uses an algorithm to pay claims when conditions in blockchain-based smart contracts are met.
    • Start-up Teambrella also leverages blockchain in a peer-to-peer concept that allows insured members to vote on claims and then settles amounts with bitcoin.
    • Dynamis provides unemployment insurance on a blockchain-based smart contract platform.
    • Travel delay insurer insurETH automatically pays claims when delays are detected and verified in a blockchain data ledger.
    • Etherisc is another new company building decentralized insurance applications on blockchain that can pay valid claims autonomously.

Traditional insurance companies, such as AXA and Generali, have also begun to invest in blockchain applications. Allianz has announced the successful pilot of a blockchain-based smart contract solution to simplify annual renewals, premium payments and claims submission and settlement.

Blockchain has the potential to improve premium, claim and policy processing among multiple parties. For example, in the last year the consultancy EY and data security firm Guardtime announced a blockchain platform to transact marine insurance. This platform pulls together the numerous transactional actions required within a highly complex global trade made up of shipping companies, brokers, insurers and other suppliers.

A consortium of insurers and reinsurers, the Blockchain Insurance Industry Initiative (B3i), has piloted distributed ledger technology to develop standards and procedures for risk transfer that are cross-market compatible. Whether or not the outcome is adopted industry-wide, it seems important for digital solutions to be created with this transparency and inclusiveness in mind.

There is clear potential for blockchain in reinsurance where large amounts of data are moved between reinsurers, brokers and clients, requiring multiple data entry and individual reconciliation. Evaluating alternative ways of conducting business is one reason for the collaboration of Gen Re with iXledger, which can explore ideas while remaining independent.

Handling of medical data and other private or sensitive information

Individuals will generate increasing amounts of personal data, actively and passively, from using phones and Internet of Things (IoT) devices, and processing digital healthcare solutions. Increasingly, consumers will want control of this scattered mass of digital data and share it with whomever they choose in exchange for services. This move aligns perfectly with the concept of a “personal data economy.” Think of information as currency and think about using blockchain to secure private data and reveal it in a secure and trusted manner to selected parties, in exchange for something.

Electronic health records are now common. Several countries use blockchain to secure patient data held digitally. This helps counter legitimate concerns about how sensitive personal data can be kept secure from theft or cyber-attack. Code representing each digital entry to the patient record is added to the blockchain, validated and time-stamped. A consortium of insurers in India is using blockchain to cut the costs of medical tests and evaluations, and to ensure the data collected is kept secure, along with other benefits including identification of potential claims fraud.

Looking to leverage the data economy, companies may employ innovative insurance propositions to engage people. Because the propositions will rely on shared data, people may be put off, fearing a loss of control over their personal information. While this fear poses a huge challenge for an industry seeking to improve its reputation for trust, blockchain technology may help insurers to reassure customers the digital data they share with them is safe.

Verification of documents

Verification of the existence and purpose documents in banks and insurance companies relies on storage, retrieval and access to data. A blockchain simplifies this process with its open ledger, cryptographic hash keys and date-stamped transactions. Actual hard copies of documents are not stored; instead, the hash represents the exact content in a form of scrambled letters and numbers. A change in a document will be exposed because it will not match the encoded one. The effect is an immutability that proves the status of the data at an exact moment and beyond doubt.

Blockchain technology is a “trustless” system because nobody has to trust anybody else for the system to function; the network of users acts together to vouch for the accuracy of the record. Examples of blockchain protecting patient records demonstrate its potential to implement other trusted and secure transactions with less bureaucracy.

There are other opportunities for insurers to move to a digitized paradigm and catalyze efficiency gains; blockchain need not be reserved for cross-industry platforms, and it’s not only useful in multiparty markets with high transaction volumes and significant levels of reconciliation; smaller-scale solutions can bring benefits, too.

Features that ensure privacy and data security

Beyond driving efficiencies, blockchain employs agreed standards for data care, which reduce the vulnerability of data that arises with the mass of sensitive data that digital connectivity creates. Other features that enhance privacy and data security include the contract process: Transactions are not directly associated with the individual, and personal information is not stored in a centralized database vulnerable to cyber-attack. Insurance companies, as well as technology companies, are accountable to their users for the security of their devices, services and software, and hackers are less likely to target enterprises with strong security.

Multiple participants and the removal of a central authority

Transparency, audit-ability and speed are standard requirements for any organization to successfully compete and transact in an increasingly complex global economy. Data is a valuable catalyst to that process and is complemented by blockchain’s ability to organize, access and transact efficiently and compliantly.

Trusted transactions require access to valuable data, and blockchain facilitates efficient access across multiple organizations. The economics for data usage will drive new business models fueled by micropayments, which will require efficiencies to scale. Business models based on data aggregation by third parties in centralized repositories with total control and limited transparency will be replaced by distributed blockchain-enabled data exchanges where data providers are peers within the ecosystem.

Decentralized peer organizations can use the blockchain for permission access, and for facilitating payments, to ensure total control of their economic models, without having a centralized authority. Data access and transactions are controlled directly by each member of the ecosystem, with complete transparency and immediate compensation.

Token economies

Ecosystems supporting peer organizations that transact or share data will require an effective mechanism for micropayments. These business models require efficiency, with less overhead than traditional account payable and account receivable workflows.

Event triggers, cryptlets that enable secure communication between blockchain, and external verification sources (oracles) will execute based on predetermined criteria, and token payments will be made simultaneously. Counterparty agreements may initially define the relationships between parties on the network, but payments are executed within the smart contract transactions.

See also: How Insurance and Blockchain Fit  

The elimination of a time delay in payments acts as a stimulant for economies; tokens earned can immediately be spent, increasing the speed at which organizations will earn and spend. Traditional delays and fees that occur throughout accounting workflows and through intermediary banks that process payments can be eliminated.

Cross-border processing

Currently, global payments involving foreign exchange introduce complexities in addition to time delays. Economic indicators and political events dramatically affect the exchange rates and profitability of transactions. Cross-border payments require access to the required currencies by intermediary banks, which can cause additional delays beyond the internal accounting workflows.

With blockchain technology, using a token-enabled economic layer simplifies the payments to support micropayment efficiencies. Participants on the blockchain network will be able to efficiently use the preferred fiat currencies to acquire or sell tokens without using intermediaries, banks or currencies.

Merging blockchain and data

Today, there are more connected IoT devices than there are people on the planet, and the data generated is growing at an exponential rate. Various sources have predicted that the number of connected devices will grow to more than 70 billion by 2025; the numbers are almost irrelevant.

IoT devices are used in homes, transportation, communities, urban planning, environment, consumer packaged goods, services and soon in human bodies. A number of insurance companies use these devices to assess driver habits and usage. Autonomous cars and changing ownership and usage models are creating a generation of insurance products that can be facilitated through IoT-collected data. Home devices can detect leaks, theft and fire damage – capabilities that reduce risk. Shipping companies use the IoT for fuel and cargo management, which offers operating efficiencies, transparency and loss prevention.

Merging the mass of IoT data with the blockchain is not without challenges, but this combination can provide a completely new way of creating an insurance model that is far more efficient and faster, and where data flows directly from policyholders to the insurer.


Interest in the trinity of bitcoin, blockchain and distributed ledger technology has significant momentum. However, the technology is not magic or a panacea for every corporate woe. It has disadvantages and limitations, and there are situations where it would even be the wrong solution. There is enough about it, though, to merit continued closer investigation – the many emerging cases of its application bear testament to that – but in place of hype we still need answers.

Blockchain: the Next Big Wave?

Blockchain is poised to change the future of insurance by creating new insurance products, services and business models, as well as promoting new ways of improving control, measuring and pricing risk. It stands to enhance client engagement, while reducing costs, improving efficiency and ultimately expanding insurability.

One example of how blockchain can be applied to insurance is found in companies such as Ethereum, a decentralized platform that runs smart contracts. In this scenario, programmable logic can execute actions once pre-determined conditions are met. This all takes place without the intervention of a third party, providing insurers with the ability to digitize processes even further.

Insurance industry experts believe that blockchain could herald a new dawn to the industry by introducing improvements and efficiencies related to higher levels of accountability and transparency. Not only will it facilitate new digital currencies, but it may also be used to introduce new products to the insurance market, mitigate risks and fraudulent claims, lower costs, restructure back-office operations and provide easier and enhanced data access to both insurers and the insured.

See also: Blockchain Transforms Customer Experience

An insurance report by Ernst & Young reveals that blockchain technology could become important in “detecting fraud and eliminating error and negligence by offering a devolved digital depository to help in verifying independently the legitimacy of policies and claims and, of course, customers.” Such a common platform, which offers a mutual record of truth, could assist insurance firms in saving a lot of time and money while improving operational efficiencies.

Studies reveal that fraud costs insurers in the U.S. and Europe alone an approximated $60 billion in annual losses. This is because 65% of these fraudulent claims often go unnoticed.

But this fraud may become a thing of the past with blockchain technology. This is because it is fraud-proof, indisputable and time-stamped and offers the highest security of identities, thereby offering help in minimizing and easily detecting insurance fraud and providing great value to the industry.

Even though blockchain technology is still embryonic, a number of established insurance firms have joined the bandwagon and are exploring the space. For instance, Shenzhen-based Ping An and Hong Kong-based AIA recently partnered with R3, a fast-growing blockchain group based in New York City.

The French bank Caisse des Dépôts recently rolled out a blockchain market initiative in partnership with a host of insurance companies such as AXA, Aviva, MAIF and CNP Assurances. The goal is to identify and encourage the development of opportunities for each of the partners by exploring these technologies.

See also: Insurtech in 2018: Beyond Blockchain  

As more and more of these technologies get up and running in the insurance industry, blockchain’s largely unexplored potential will begin to unfold. This trend, in particular, is set to have substantial impacts on the future of the insurance industry, but it will take time for them to be fully realized.

So far, there hasn’t been as much movement in North America, but that’s likely to change soon. If adoption and innovation with blockchain continues at its current rate, there’s no doubt that this technology will play a significant role in shaping the future of the industry sooner rather than later.

Guide for Insurtech Work With Carriers

This article will be a 15-minute read. If you work for an insurtech startup that wants to get a deal done with an insurance carrier, it will be a very valuable 15 minutes. If you know somebody like that, please forward it to them.

Imagine this: You are the founder of an insurtech startup. You’ve got a great solution that could deliver meaningful results for any insurance carrier that brings you on. You’ve been through an accelerator (or two), have received initial funding and have your advisory board in place. You may even have a couple of pilots under your belt.

Now, it’s time to really start cranking up your sales/partnerships.

As you roll out sales strategies for the year, I thought it would be useful to provide a guide for startups to consider when preparing to meet with their next prospective carrier.

Collaboration between startups and carriers is a topic near and dear to my heart. While the focus is primarily for B2B startups, many of the same principles outlined below apply to D2C startups, which are looking to partner with an insurance carrier for distribution purposes.

The framework for this guide is as follows:

  1. Know your value
  2. Know your customer
  3. Find out who holds profit and loss (P&L)
  4. Help them understand how you’ll bring value to them
  5. Sign a letter of intent (LOI) and agree on a pilot
  6. Focus on both the art and science of the sale

Know your value

Startups, if you are reading this, please keep the following question in mind when you are reading the rest of the article.

Is your solution going to help a carrier save costs or increase revenue?

Have a clear value proposition and give tangible examples of what you do (i.e., use cases where it is already working).

For example:

  • Saving costs – DO YOU remove the need for manual/high cost processes? Identify opportunities to improve lapse rates, persistency ratios, loss ratios? Provide the carrier with new data sets for better and more accurate modeling? Etc.
  • Driving revenue – DO YOU increase a carrier’s number of prospects? Increase conversion rate? Increase sales volume because of a new niche product capturing a new market? Etc.

If you can not answer this question, you may want to focus on this first before reading the rest of this article. At the very least, have that question answered before you follow the advice provided in this article.

Know your customer

You know what value you provide to carriers.  Now, it’s time to go meet with them.


Before you meet with a carrier, do your homework and be specific about which carriers you want to target.

See also: Insurtech vs. Legacy Insurance Carriers  

Information you should know about the carriers you are targeting:

  • What is their organizational direction?
  • Who is their main competition, and what has their competition been doing when it comes to innovation?
  • Who are the key players within the organization? (See next section)
  • Has the carrier done anything really meaningful in the market recently?

The more you know about a company when you walk in, the better. Don’t you feel good when someone knows a bit about your solution when you first meet the person?

There are plenty of ways to get this information. Read about the company and research whatever is publicly available online. Use LinkedIn and your network to find out more if you can’t find it online.

Once you’ve done your homework and know who you are going to target, work on getting in the door. LinkedIn and your network will be powerful here, too.

However, before you meet with a carrier, it’s important to know who in the organization you will and need to meet with.

The below is a basic, high-level organizational chart of an insurance carrier (this will vary depending on the organization):

A few notes on this chart:

CIO = Chief IT officer

CDO = Chief distribution officer

Chief actuary can either report to CFO or directly to the CEO (I have seen both)

Innovation can sometimes be labeled as transformation or digital strategy (I have seen either or all three)

Experience and service – relates to customer (i.e. customer experience and customer service)

I have not included HR in this diagram (they are a very integral part to any company, but usually not involved in insurtech initiatives)

Now, it’s time to meet with the carrier.  So, who do you target?

Find out who holds the profit and loss (P&L)

Ultimately, any initiative that an insurance carrier undergoes must have some sort of return on it. As such, as part of the approvals process for an insurance carrier, the people who have the most say as to whether or not to bring a solution on board will be the ones who hold a P&L.

Why are those who hold a P&L important?

Because they will be the ones who are ultimately measured on the success of an initiative and the people you will have to convince to buy your solution.

Others are important, too, so you need to know who all the players are and what motivates them, as all will have different and important roles throughout the whole sales cycle.

Who are the players?

While you read directly below, keep in mind what your solution is offering and who the person is who you are ultimately going to need to get the most buy-in from.

The top 

CEO – This one should self-explanatory

The control functions  – these are people who may not be a user of your insurtech solution but will want to analyze it to the nth degree to make sure it’s good for the organization as a whole.

CFO – The CFO monitors/controls the P&L, so, yeah, he or she is important. The CFO may even be one of the most important, as, in some cases, the CEO will only sign off on a project once the CFO has endorsed it. That question I asked before (save cost or increase revenue) is of utmost importance to this person. Expect the answer to that question to get scrutinized, too.

Chief actuary/appointed actuary – As mentioned before, I’ve seen this position report directly to a CEO and to a CFO. Regardless, the person in the position will ask questions of a financial nature. If you have a solution that claims to improve lapse rates, increase persistency or anything else that touches pricing, be ready for some detailed questions from this department.

CRO – I’ve seen variations of this, but, for the most part, risk will encompass compliance, risk and legal. These are three very important departments of the business:

  • Compliance – compliance will look at things from a regulatory perspective.
  • Risk – Enterprise risk management is an interesting concept for insurance and could encompass a lot. Here is a useful article on it. Effectively, risk functions will look at a variety of risks – from market/macro risks to conduct risks to credit risks.
  • Legal – this one should be self-explanatory.

The profit centers – these are the ones who will likely use your insurtech solution and the ones who will ultimately get measured on the effectiveness of your solution (i.e. P&L).

Chief distribution officer – This position will vary depending on the organization; its primary goals are to grow revenue (i.e. sales, business development, commercial). If your solution has anything to do with any part of the sales value chain, then buy-in from the chief distribution officer will be key.

COO – Operations departments have a variety of functions under them – from underwriting to customer service to claims. If your solution has anything to do with back-office operations or the customer, then this is another key stakeholder for you.

Both of these definitions are wide for a purpose. These two departments have the most interaction with a customer/policyholder and will be very particular about anything that is going to affect that relationship. They will need to be convinced that the solution being implemented does not disrupt that relationship.

Many insurtech solutions are targeted at improving the customer experience. However, these two departments have the experience in actually doing it for their existing customers and will feel very particular about saying what can be done to improve that relationship. Be mindful of this when you start engaging with people from these departments.

Lastly, the aim of many carriers is to make more prominent the role of the chief customer officer or a customer experience department. For the moment, I put that position into the advocate category below, unless the person specifically holds a P&L.

The advocates – these are typically the ones you will meet with first and the ones who will be very important in convincing the the profit center category that your solution should be taken on board.

CMO – I debated as to whether to put this person in the profit center category, but I feel they belong more so in the advocates column. The reason is that a lot of the solutions brought on by the marketing team are then provided to the distribution team to help with their sales.

In some cases, where the carrier has a D2C solution, it may fall directly under the CMO/product team. If the CMO holds a P&L, you may want to consider this person/department a key stakeholder rather than an advocate.

CIO – This is where you will see the titles of innovation, transformation or digital strategy. The IT department is obviously an important one for you, as you will have to work with when it comes to implementation of your solution.

IT departments are seen as an enabler to the rest of the business. This means that, while you need to convince this team that your solution is technically sound, IT will not make a call on your solution from a business needs standpoint.

Note: I put corporate strategy under the CFO office in the org chart above, as sometimes there are two or more different strategy departments in an organization. Sometimes this is a completely separate department that reports directly to the CEO.

Regardless of which department it is in, I would label any strategy department as advocates.

My labels above are the traditional ones, but some organizations may have people who are more powerful than others. Try to find this out through the power of your network.

Help them understand how you’ll bring value to them

The first meeting will likely be with one/some of the advocates. These may be of the manager/senior manager level, who are knowledgeable enough to do the first round of vetting for their more senior managers/key stakeholders in the organization.

This session is an opportunity for the carrier to get a high-level understanding of what is being proposed to see if it should bring this solution forward. You will need to at least demonstrate the answer to that key question during this session.

After a few of these sessions, assuming the carrier is interested, more senior management/other key stakeholders will join in to get their view. If you start seeing more senior personnel in your meetings or people who fall into the profit center bucket, then you are on the right track. If you keep only meeting with advocates, it may be time to start questioning whether you are making progress.

See also: Rise of the Machines in Insurance  

It’s also fair to ask the carrier who will be held accountable for the success or failure of the solution being implemented. It will help to get those people involved and excited early on.

Getting people excited and on board is half the battle. It feels like the deal is done. Then, the red tape comes in.

Queue, the approvals process.  

Approvals to undergo a new initiative for an insurance carrier can be cumbersome. The person who is leading the project will need to do a write-up of the solution for the rest of the organization to evaluate (this will include some combination of people from the control function, profit center and advocates).

This write-up will include:

  • Why the carrier should do this project (qualitative and quantitative analysis that will include costs/benefits/KPIs)
  • The technical architecture of the solution
  • Risks associated with the solution, with mitigating controls (technical and non technical)
  • Regulatory/legal implications
  • And more

This may be seem like a lot, but multibillion-dollar corporations need to ensure they have a paper trail for initiatives. (Side note – you should always have an audit trail yourselves!)

For a startup, the more you can help with this report and prepare yourselves for these questions, the better. Think of ones that are specific to your solution. You will save time if you address these early on.

The carrier will also want to assess your solution against three or four others in the market. Hence, it is important to know your competition and how you stack up. Again, if you have this upfront, you will save time later.

You will want to constantly communicate with your key contact(s) at the carrier throughout the approvals process, helping them and being with them to answer any questions that may come up. Once approval comes in, they will want to start work, so you had better be ready.

Sign an LOI and agree on a pilot

Once all the approvals are done, get your LOI signed and agree on a pilot. An insurance carrier typically will not do this until it has done all of the internal approvals.

Focus on both the art and science of the sale

Sales is an art and a science. The science is a lot of what I mentioned above; know your prospect, have a sales pitch down and close.

The art is things that you learn through more practice, such as non-verbal queues and cultural nuances. If you are doing cross-border collaboration (i.e., an American startup going to Asia or vice versa), there are a ton of nonverbal queues and cultural nuances to be mindful of.

Some practices that are OK in some markets may not be in others. I own a book called Kiss, Bow, or Shake Hands. I bought this when I first moved overseas, and it has been most helpful to me in this respect.

Lastly, I’ll repeat some advice that I mentioned in my ITC review from Benoît Claveranne, group chief transformation officer of AXA:

  • When a startup approaches an incumbent, they should make clear what they are looking for – to be invested in, bought out or partnered with. A lot of time is wasted on this during early engagement, and it will help move the conversation along if it is clear early on.
  • For startups – make a call after one to two meetings to see if the incumbent is serious about doing business. Do they have a budget and a team to develop it? If not, it may be time to move on to the next client.


During my financial advising days, I read Dale Carnegie’s “How to Win Friends and Influence People.” The one principle from that book that has always stuck with me is “make the other person feel important.”

By making people feel important, you let them know that you genuinely understand and care about their needs first and that you are not just trying to sell them something, but instead, providing them with a solution that meets that specific need.

The above is is a high-level guide for you, the insurtech founder, to help make an insurance carrier and the people you are pitching feel important by, ultimately, understanding their needs and how you can help them.

Creating partnerships between insurtech startups and insurance carriers is something I am passionate about and spend time doing every day. I am inspired when I hear stories from the field and new ideas on how to better this process.

I would love to hear your thoughts and feedback on this topic.

This article first appeared at Daily Fintech.

New Applications for Drones

Drones are becoming widely used in a variety of industries, including insurance. As mentioned last week, millions are expected to be sold in 2017, with PwC calculating the global market for the commercial application of drones at more than $127 billion. So how are insurers using drones right now, and what opportunities are arising?

Though drones could theoretically benefit many different aspects of insurance operations, to date the most common application has been roof inspections conducted by certified insurance assessors before payment is made on claims for storm or hail damage. Traditionally, assessors use ladders to climb onto roofs and sometimes need harnesses if the roof is high or steep enough. A manual inspection can take half a day.

See also: Drones + Gig Economy = Win for Insurance  

A 20-minute drone inspection captures around 350 images of the property in question and provides data that can be used to identify moisture trapped in roofs, produce 3D models and elevation maps, calculate flood or wildfire risk and derive property measurements.

This gives insurers several good reasons to carry out these drone inspections. Here are some notable examples in the area:

  • Erie Insurance, an American traditional insurer active in the auto, home, commercial and life insurance sectors, is generally credited as the first insurer to use drones to inspect roof damage. It received approval from the American Federal Aviation Authority in the spring of 2015.
  • Betterview is an insurtech devoted to using drones for property inspections. The company announced this April that it had executed 6,000 rooftop inspections in the last two years and then signed a partnership agreement with Loss Control 360, which makes software for insurance carriers and inspectors. “We have seen insurers allocate budget dollars in 2017 to move from concept to real production use,” Betterview CEO David Lyman told the Insurance Journal. “In 2018, we expect to see a significant ramp up in the use of drones by insurers and reinsurers.”
  • Travelers has used drones to inspect damaged roofs since 2015. The carrier provides insurance-specific drone pilot training to its claims teams; by May this year, it had trained 150 pilots and expected to train hundreds more before the end of the year.

But it’s not just roof damage that drones are being used for.

Beyond roof inspection

The French global insurer AXA reported in 2016 that it was using drones in a variety of applications in France, Switzerland, Belgium, Mexico and Turkey. The business case is simple— to assess claims, drones can go places that are risky for humans: into fire-damaged buildings, into places where chemical toxicity is suspected and into manufacturing plants or other areas that have been subject to natural or other disasters.

AXA is developing tools and platforms to use drone images more efficiently, including this new data source in its claims adjustment processes.

Coupling imaging technologies with advanced analytics is proving useful across industries. Drones are being used in disaster management, geographic mapping, crop monitoring, supply chain monitoring, storm tracking and weather forecasting, to maintain power lines, monitor traffic flows and conduct surveillance—all instances that may assist insurers to dynamically adapt and innovate on insurance products and risk cover, especially for short-term cover.

Country Financial is, for example, using drones to identify issues in fields that are hard to spot with just “boots on the ground.” It says its crop claims adjusters using drones can scout three times as many acres as an adjuster on foot. This technology also gives farmers more information to consider when choosing how much crop insurance coverage they need, the company says, and it means more insurance plans can be based on enterprise-level data rather than county numbers.

Evolving drone technology

While these examples provide a snapshot of the growing use of drones in P&C insurance inspections, they also highlight some of the limitations of current applications.

Regulators require drone pilots to maintain line-of-sight during a flight, limiting the range of a drone’s flight. New regulations—and wider use of fixed-wing drones—could dramatically boost this range, with corresponding increases in the amount of property a single flight could cover. Technology and regulation could also conceivably enable greater autonomy for drones in the future, allowing a single pilot to oversee multiple drones at once.

See also: What Is the Future for Drones?  

A recent Businessinsider.com article highlights the emergence of generation seven of the technology, with the announcement of 3DRobotics’ all-in-one drone, Solo. These next-generation smart drones have built-in safeguards and compliance tech, smart accurate sensors, platform and payload interchangeability, automated safety modes, enhanced intelligent piloting models and full autonomy, full airspace awareness, auto action (take-off, land and mission execution). Imagine the future opportunities these drones will open up for insurers.