Tag Archives: Cuvva

10 Insurtechs for Superb Engagement

We have written about the key challenges that insurance carriers are facing. Winning insurtechs are those that tap into these challenges to accelerate digital transformation. In this post, we’ll focus on the first of seven different flavors of winners in fintech insurance: insurtechs that drive superb customer engagement.

Customer engagement leaves much to be desired

Most insurers still have low Net Promoter Scores. In spite of all the efforts and investments in the last years, customers continue to experience a lot of friction throughout the customer journey. And what is even more challenging, rising consumer expectations are more and more difficult to meet. The frame of reference is set, not by the service offered by other insurers, but by what customers experience when they reach out to other brands, for instance when using their smart phone.

See also: Core Systems and Insurtech (Part 1)  

There are a bunch of reasons why customer engagement is the first flavour we are exploring in this blog series. We believe customer engagement is the key to turning digital transformation efforts into a lasting competitive advantage:

  1. Customer engagement is the key to build trust
    This is what research told us: Trust is built by excelling in the daily provision of services. Touch point performance, the perceived quality of customer-facing employees, the ease of doing day-to-day business are the most important elements in building or reinforcing trust.
  2. Customer engagement offers new points of differentiation
    Because virtually every financial institution is simplifying its product range and individual products, it will become increasingly difficult to differentiate from competitors on a product level.  Consequently, the points of differentiation of financial services will shift to the way the company engages with customers, e.g. in service and customer experience.
  3. Service is becoming a much more important purchase driver
    In the past, you shared your thoughts and experiences with your neighbors over your backyard fence. Nowadays, people exchange their thoughts and experiences also over a virtual fence powered by smart phones and social media. Peer-to-peer information sharing is almost always about the service quality. This has a huge impact on our decision-making. We are less and less choosing solely on price any more; more and more we are — within a certain price bracket — choosing on service. Service is becoming a much more important purchase driver.
  4. Lack of customer engagement results in loss of value
    Every day, thousands of insurance and financial products are purchased that do not completely match the needs of the customer. The cancellation rate in life insurance is proof of this. Sunk costs include billions of euros in intermediation costs and, even more importantly, of course, huge loss of value for customers.
  5. Customer engagement is a primary source of profit
    Ample research shows that customers who have had real positive experiences will drive revenues and profit in a variety of ways. They are more open to other products of that company. They will be less sensitive for offers from competitors. The costs to serve will decrease. And the customers are more likely to advocate your services to friends and family.
  6. New entrants set new standards to engagement
    Not all new entrants will survive, but they will definitely set new standards. Despite the fact that they differ quite a lot in nature, they have one thing in common. Every new entrant is attacking the frictions and complex processes that customers have to deal with when working with financial institutions. Incumbents need to step up to the plate to keep up.
  7. Regulators scrutinize how the industry engages with customers
    During the first couple of years “after Lehman,” the various supervisory authorities have focused on the way money was made, and the quality of financial products. We now see that that focus has widened to just about every aspect of customer engagement: sales, advice, service, even advertising. Regulators are forcing insurers to have a 360-degree view of customer engagement to treat customers fairly.

Address the pain points

The challenge is to close the gap between the insurer and the customer. Moving from transaction to interaction, from one-way communication to a dialogue and from interaction to intimacy, taking the dialogue from exchanging information to actions.

Too often, customer engagement is mistaken for creating a Disney-like experience. We think the opportunities are much closer to home. In our work for insurers, we have learned that customers across the globe more or less experience the same pain points:

  • “They do not really know me. They do not understand my situation.”
  • “I am not convinced they act in my best interest.”
  • “They do not treat me nicely. I don’t think they would walk the extra mile.”
  • “Their information confuses me.”
  • “They don’t make it easy for me.”
  • “I am not sure what I’m covered for and what the overlap with other policies is.”
  • “It is not clear what the status of my claim is.”
  • “I am not sure what I am exactly paying for; it seems very expensive.”
  • “It takes ages to get an answer. And too often I’m not getting any.”
  • “What the call agent says is different from what the broker told me.”
  • “They don’t treat me fairly.”

Just imagine what would be accomplished in terms of customer engagement if all these pain points were solved.

Furthermore, insurance is still about averages, products, one-size-fits-all, paper, brokers and agents – which is not always in sync with changing customer preferences and what technology is able to. In fact, we notice that customer engagement technologies that are widely accepted in other industries are still hardly used in insurance.

Take the use of video. Research shows that only 7% of a conversation is about words, 38% is about tone of voice and 55% is about body language. We have seen quite a few successful WebEx implementations; e.g. bank employees who assist customers in the complex process of purchasing a mortgage, with application-to-proposal conversion rates increasing from 10% to 35%, and proposal-to-signed contract from 50% to 75%.

Another no-brainer is the use of YouTube channels to explain what customers should do when a particular event takes place. These channels are extremely effective to explain more complex consumer electronic products but are hardly used in insurance. Think of the application of social data to simplify the underwriting and onboarding process of new customers and consequently higher conversion rates, or to login to certain information to simplify the customer experience. Or take the poor state of FAQs at many insurers’ websites, while a company such as Zendesk is able to launch a tailored state-of-the-art solution in just a few weeks and at very low costs.

The Tripolis communication platform allows companies to take personalization to a next level, deploying real-time relevant dynamic content in, for instance, email campaigns. Customers receive personalized real-time information and offerings that anticipate their context, the time of day, where they are – not when the email is sent, but at the moment the email is opened. Obviously, this improves the impression of a one-to-one intimate relationship with the brand. While the use of such solutions is increasing fast in other industries; this is hardly the case in insurance.

Fortunately, more and more insurtechs are helping insurers to make a leap in customer engagement, to become much more effective in every step of the customer journey.

And, of course, we also see new entrants that are attacking specific frictions, complex processes and product and pricing imperfections that customers have to deal with when working with insurance companies. Trendwatching.com coined the term Clean Slate Brands: a whole new breed of exceptional new brands living by the rules of business 3.0 — newer, better, faster, cleaner, more open and responsive. Brands that consumers are therefore attracted to, also because they cannot have sinned yet.

See also: Insurtech: Unstoppable Momentum  

A line-up of 10 insurtechs that drive superb customer engagement in various stages of the customer journey:

PolicyGenius addresses the uncertainty of consumers with regard to gaps and overlaps in the various policies they hava purchased over time. PolicyGenius offers a highly tailored insurance check-up platform, where consumers can discover their coverage gaps and review solutions for their exact needs. PolicyGenius’ online store includes solutions from life and long-term disability to pet insurance. Quoting engines offer side-by-side comparisons of tailored policies.

Trov offers customized home insurance by allowing coverage of individual key items rather than a one-size-fits-all coverage set with average amounts. An app-based platform allows customers to discover and track the real-time value of their belonging. They simply upload the items they own to a digital locker, by scanning a product UPC code, entering an auto VIN number or a home address or looking up individual items in an in-app database. Trov (backed by leading fintech VC Anthemis) has partnered with a wide variety of proprietary data sources like Zillow (U.S. real estate), Blackbook (U.S. autos) and Symantics3 (global consumer products).

Erste Digital taps into the fast-growing use of social media and mobile to purchase products and services – quite neglected by traditional insurance companies. Erste Digital is a B2B digital broker platform selling “add on” insurance. The Scan2Insure mobile app allows customers to scan a barcode to instantly get a quote to insure the product. To sell through social media channels, Erste Digital has integrated the platform into YouTube, Instagram, and Facebook.

BIMA offers micro-insurance in 14 emerging markets in Africa, Latam and Asia, using a mobile-delivered model. Traditional insurance companies find it difficult to service those living on less than $10 per day. And that is a shame, because insurance is a powerful tool that can prevent families from falling back into poverty in case of illness and injury. BIMA gives customers access to micro-insurance that is paid for using prepaid mobile credit or postpaid billing. Policies start from $0.23 per month, and BIMA pays out within three days of receiving a claim. Today, BIMA serves more than 18 million customers.

Recently, BIMA decided to enter the health sector. In emerging markets, people need to travel far and spend many hours in waiting rooms to see a physician. BIMA’s mobile health services make it easy, quick and affordable to access medical advice from a qualified doctor via a tele-doctor service. Memberships are available in three, six or 12 month pre-paid packages and include an unlimited number of phone consultations with a qualified doctor for the whole family.

More about BIMA’s fascinating business model in one of our next posts.

Cuvva introduced a mobile app that enables the user to sign up, get a quote and buy coverage in less than 10 minutes. Quite different than what customers have to experience when they apply at the average insurance firm. Basically, a completely digital experience run from a smartphone. What is also addressing a customer need is that Cuvva gets customers covered for only as long as they need it; from a single hour to a whole day – rather than the usual single option of a year.

Another imperfection, at least in the eyes of customers, is the costs of deductibles. insPeer allows users to share insurance deductibles with their friends and family members.

Collision damage waiver and loss damage waiver on rental vehicles are also always expensive. Insuremyrentalcar provides the solution with a package that starts from $5 a day to $93.99 a year.

Embroker says it aims “to revolutionize the way businesses buy, manage and understand insurance.” The company combines the service and expertise of the best-in-class brokers with an innovative technology platform. The 100% online solution allows customers to optimize insurance spending with policy benchmarking tools and provides a real-time interface to track and manage claims, apart from many other beneficial features.

Claim Di and Snapsheet are both all about making the most important moment of truth of a car insurance, when an accident takes place and the claim process that follows, less of a hassle.

The Claim Di mobile app “shake and go” feature facilitates communication and claims between parties in an auto accident and their insurance companies. The drivers can shake the phone near the phone of another party who also uses Claim Di, allowing for an insurance claim without waiting for a surveyor from their respective insurance companies to arrive at the scene (which is common practice in Thailand). Claim Di also includes roadside assistance, a call service for insurance companies and a module to facilitate payment to claimants.

Snapsheet provides insurers the process and technology to optimize virtual claims operations. Claims adjusters get the tools they need to provide a seamless experience; a mobile solution enables customers of insurers to settle a claim completely virtually. The solution simplifies claims adjusting, reduces the cycle time and increases customer satisfaction. Consequently, Snapsheet’s solutions are transforming claims organizations into a customer-first experience and cost-efficient operation.

Bauxy’s offerings takes away hassle and frustrations in a very different way. They enable consumers to file their claims just by taking a photo of the invoice. No more queuing on the phone to talk with insurance company call agents, asking when the money will be reimbursed and getting frustrated in the process. Bauxy submits the claim on the consumer’s behalf.

What these insurtechs have in common is that they cut two ways. On the one hand they solve frictions and dramatically improve customer engagement. On the other hand, they simultaneously improve operational efficiency. In our view, this is what makes an insurtech a winner.

In our next post we will focus on the second flavor of winners in fintech insurance; insurtech solutions for dramatic cost savings. So stay tuned!

5 Topics to Add to Your List for 2017

As an industry, we are knowledgeable. In fact, I think one could say that insurers may know more about the way the world works than most other industries. We hold the keys to risk management and the answers to statistical probability. We underpin people, businesses and economies world-wide. We have centuries of real-world experience and decades of real-world data dealing with individuals, groups, businesses, property, life, investments and health.

Yet, in 2017, none of that experience will matter unless we are willing to embrace an entirely new field of knowledge. The convergence of technology with digital, mobile, social, new data sources like the Internet of Things (IoT) and new lifestyle trends will make insurers better, smarter and more successful IF we are willing to “go back to school” and audit the class on modern, innovative insurance models, generational shifts in needs and expectations and disruptive technologies.

This class is largely self-taught. Between you, Google, traditional and new media (think Coverager, Insurance Thought Leadership and InsurTech News), social networks and a few hours each week, you can expand your horizon toward the future to become a knowledgeable participant in 21st century insurance. It will help, however, if you know what to search for. In this blog, I’m going to give you five high-level areas to keep tabs on in the coming months. These are the places where technology and market shifts are going to create massive competitive energy in the coming year.

Insurtech, Greenfields and Startups

As of this writing, AngelList (a startup serving startups,) lists 1,069 insurance-related startups. Many of these are new solution technology companies. Others are new insurance companies or MGAs focusing on new market segments, new products and new business models. The influx of capital from venture capital firms, reinsurers and insurers has advanced the proliferation of startups and greenfields based on new tech capabilities. Business model disruption will continue to be mind-boggling, exciting and scary all at the same time — bringing insurtech into the mainstream and powering the industry-wide wave of innovation.

Whether you are sifting through ideas to improve your competitive position, launch a new insurance startup or greenfield, seek partners actively engaged in insurtech or invest or acquire a new technology startup, insurtech companies and their growing numbers are to be watched. Reading through these types of lists will give you a feel for the expansive nature of insurance. You’ll see how marketing minds are turning traditional insurance concepts into relevant products and solutions that fit today’s and tomorrow’s lifestyles. Be inspired to engage in insurtech in 2017, because time is of the essence. For background, start by reading Seed Planting in the Greenfields of Insurance.

See also: 10 Predictions for Insurtech in 2017  

Artificial Intelligence and Cognitive Computing

AI and cognitive computing technologies like IBM’s Watson have been touted as the link between data and human-like analysis. Because insurance requires so much human interaction and analysis regarding everything from underwriting through claims, cognitive computing may be insurance’s next solution to better analyze, price and understand risks using new data sources and add an engaging and personalized advisory interface to their services to achieve efficiency and improvements in effectiveness as well as competitive differentiation. Cognitive computing’s speed makes it a great candidate for underwriting, claims and customer service applications and any task requiring near-instant answers. IBM and Majesco recently announced a partnership to match insurance-specific functionality with cloud and cognitive capabilities. This will be an area to watch throughout 2017.

On-Demand, Peer-to-Peer and Connected Insurance

Trov allows individuals to insure the things they own, only for the periods during which they need to insure them. Cuvva is betting that people will want to have insurance on their friend’s cars during the time in which they borrow them. Slice launched on-demand home-share insurance to hosts using homeshare platforms like Airbnb, HomeAway, OneFineStay and FlipKey. Verifly offers on-demand drone insurance. Insurance startups are filled with companies that are providing insurance to the new spaces, places, behaviors and lifestyles where insurance is needed.

Other startups are using social networks and the Internet of Things to bring parity to insurance, often lowering premiums. Peer-to-peer insurers like Friendsurance and Lemonade put customers into groups where the group’s members pool their premiums, payment for claims come from the pool and, in the case of Lemonade, leftover premium is contributed to social causes. Metromile uses real usage data to provide fair auto insurance premiums.

Here is a space where insurers must keep their eyes open for opportunities. How can P&C insurers cover those who don’t own a car, but who still drive periodically? How will group health insurers help employers lower their rate of medical claims? How will life insurers promote wellness and reduce premiums?  Many of the answers will be found in digital connections, social knowledge, IoT data and an ability to provide timely, instant and on-demand coverage.  For more insight, start reading 2016’s Future Trends: A Seismic Shift Underway and the soon-to-be-released update.

The Revival of Life Insurance

One area that will receive a much-needed insurtech stimulus will be life insurance. The life insurance industry ranks last as noted in the recent research, The Rise of the New Insurance Customer: Shifting Views and Expectations; Is Your Business Ready for Them?, which is likely reflected in the decline of life insurance purchases over the past 50 years. The 2010 LIMRA Trends in Life Insurance Ownership report notes that U.S. individual life insurance ownership had dropped to the lowest rate in 50 years, with the ownership rate at just 44%. As new simplified products are introduced, new data streams proliferate and real-time connections improve, life products are poised to change. Already, new life insurers and traditional life insurers are positioning to use connected health data as a factor in setting premiums. John Hancock’s Vitality is perhaps the best current example, but other players are entering the mix — many simply claiming to have a better methodology for selling and servicing life policies. Haven Life, owned by Mass Mutual, and companies such as Ladder, in California, are reinventing term insurance … from simplifying the product to creating an “Amazon-like” experience in buying in rapid time. Ladder, in particular, uses a MadLibs-type underwriting form that’s not only relevant but fun to use.

The life insurance industry is hampered by decades-old legacy systems and the cost of conversion and transformation is taking too long and costing too much. As a result, look for existing insurers to begin to launch new brands or new businesses with modern, cloud core platforms to rapidly innovate and bring new products to market for a new generation of customers, millennials and Gen Z. As we saw in 2016, most new entrants are aimed at term products that will sell easily and quickly to the underserved Gen Z and millennial markets. New life players and products, as well as existing life insurers, reinsurers and even P&C insurers seeking to capture this opportunity will be interesting to watch in 2017.

See also: What’s Next for Life Insurance Industry?  

Cloud and Pay-As-You-Use

If your company is underusing or not using cloud computing with pay-as-you-use models, 2017 should be a year for assessment. Though cloud use isn’t new, its business case is picking up steam. Search “cloud computing and insurance” and you’ll find that the reasons companies are seeking cloud solutions are evolving.

The case for core system platform in the cloud reached the tipping point in 2016 … from nice to consider to a must have, and it will be the option of choice in 2017. The logic has grown as capabilities have improved, cost pressures have increased and now the demand for speed to value and effective use of capital on the business rather than infrastructure is gaining priority. Incubating and market testing new products in a fail-fast approach allows insurers to see quick success and capitalize on pre-built functionality with none of the multi-year implementation timeframes.

Increasingly, many insurers are taking advantage of the same pay-as-you-use principles of cloud as consumers themselves. They are paying as they grow, with agreements that allow them to pay-per-policy or pay based on premiums. They are using data-on-demand relationships for everything from medical evidence to geographic data and credit scoring. They use technology partners and consultants in an effort to not waste downtime, capital, resources and budgets. They are rapidly moving to a pay-as-they-use world, building pay-as-they-need insurance enterprises. This is especially true for greenfields and startups, where a large part of the economic equation is an elegant, pay-as-you-grow technology framework. They can turn that framework into a safe testing ground for innovative concepts without the fear of tremendous loss, while having the ability grow if the concepts are wildly successful. Major insurance research firms advocate cloud as a smart approach to modernizing infrastructure and building new business models. Keeping cloud on your company’s radar is crucial and good place to start is reading The Insurance Renaissance: InsureTech’s Pay-As-You-Go Promise.

These are just a few of the areas we should all be watching throughout 2017, but the vital step is to take your new knowledge and apply your “actionable insights” throughout your organization, powering a renaissance of insurance.

Make 2017 your company’s Year of Insurance Renaissance and Transformation!

Asia Will Be Focus of Insurtech in 2017

Asia will be the key pillar in the coming revolution of insurance and in all likelihood will become the hottest market for insurance technology (insurtech) globally. It’s no longer just a pipe dream, as this time all the stars are aligning. Take the sheer population size and rapidly emerging tech-savvy middle class, together with low effectiveness of traditional insurance distribution. Combine that with a destabilizing wave of political populism, making its rounds across much of the developed world, and you’ve got most of the ingredients for a region that will take on a leading global role for insurtech.

So what, if anything, is missing to really ignite insurtech in Asia? It turns out that while the region is ripe for insurtech, the actual quantity and quality of startups in Asia is nowhere near that of other regions… at least not yet.

Share of investments in insurance startups can be used as a good proxy to the overall level of insurtech activity around the world. According to the figures, the U.S. takes 63%, with Germany (6%), U.K. (5%) and France (3%). China is at 4% – which doesn’t account for Zhong An’s massive investment in 2015 — and India at 5% (Source: CB Insights).

See also: The Future of Insurance Is Insurtech  

So the logical question is, why aren’t there more startups in Asia, considering the substantial opportunity and funding that exists in the region? Is it due to a shortage of experienced entrepreneurs, difficulty of starting a business, lack of access to investment or something else? The answer is that it’s likely a combination of a few factors, including a weaker early-stage entrepreneurial ecosystem, which doesn’t yet effectively support startups, and a cultural aspect of lesser tolerance for failure. Both of these are changing fast, though, and entrepreneurs across Asia are starting to identify and test innovative insurtech solutions.

The following are just a few recent notable insurtech startup examples across Asia that have already reached beyond Series A funding: Zhong An (an $8 billion Chinese insurtech startup), Connexions Asia (Singaporean flexible employee benefits platform with a U.S.$100 million valuation), and two large insurance aggregators out of India– Policybazaar and Cover Fox.

So why am I convinced that Asia insurtech startups will not end up dominating their regional home turf ?

Probability and “Survival of the Fittest”

The lack of critical mass of startups in the region means that they will not enjoy the same quality filters and network effects of the larger entrepreneurial ecosystems of the U.S., Europe and to a somewhat lesser degree China.

“Surviving” U.S. and European startups have to fight their way across a lot more competition to reach scale in their home markets. Hence, where a weaker startup in Asia could get repeated life support simply because there aren’t that many others to invest in, natural selection weeds out the weaker models in EU/U.S. much quicker in favor of more robust ones. Stronger startups then get to attract the best talent from the entrepreneurial ecosystem, including talented entrepreneurs whose models didn’t work as well, further reinforcing successful EU/U.S. startups.

Home Market Advantage

Success in a large home market like the U.K., Germany or a few U.S. states gives a substantial boost to any startup. It provides both credibility and cash flow to allow a much more aggressive expansion into other regions. This also gives a startup flexibility to develop the necessary adjustments to the business model to adapt it for Asia.

The U.S. and EU have a deep domain level of insurance expertise, which gives EU/U.S. startups from those regions a further edge to tap advisory expertise locally, because most of the largest global insurers are based in these two regions.

Lastly, considering that most startups adopt a collaborative approach with insurance companies, having a relationship that originates close to the top decision maker at headquarters gives an added advantage to EU/U.S. startups when they are looking at expanding to new regions. I’ve personally experienced examples of relationships developed in Europe that later carried over in creating a pre-warmed partnership with the insurer’s operations in Asia.

Regulatory Complexity

Asia is made up of a large number of countries, where each has its own insurance regulator, who possess views on how things should be run. This means an additional potential growth hurdle for Asian startups.

For example, a startup out of Singapore will need to figure out how to navigate the neighboring Asian country regulatory regimes pretty early in its growth cycle. Thailand, Malaysia, Indonesia and Vietnam markets all have diverse regulatory requirements. This lands the Singaporean startup at a disadvantage vs. a more mature startup out of EU/U.S. – which not only has experience dealing with regulators in its home market but also possesses a proven track record and a larger resource pool that it can use to overcome any regulatory issues.

Meet Future Leaders of Asia InsurTech

Here are  35 insurance startups from across the U.S., Europe and China that have a real shot at collaboratively shaping the future of Asia’s insurance . Granted that not all of these startups will successfully adapt their models for Asia, a few would and will go on to successfully dominate Asia’s insurtech landscape in the foreseeable future.

Credit: George Kesselman

Credit: George Kesselman

The future of insurance in Asia is coming fast, and it’s looking pretty exciting!

See also: Insurtech Has Found Right Question to Ask  

Below are links/brief description of each of these 35 ventures.

U.K.

  • Guevara – People-to-people car insurance
  • Bought by Many – Insurance made social
  • Cuvva – Hourly car insurance on-demand
  • SPIXII– AI insurance agent
  • Gaggel – A better alternative to mobile phone insurance.
  • ClientDesk – Digitizing the insurance industry
  • Insly – Insurance broker software

Germany

  • SimpleSurance – World’s leading e-commerce provider for product insurances
  • Friendsurance – The future of insurance (P2P)
  • Getsafe – One-stop digital solution for all your insurance matters
  • Finanz-chef24 – Germany’s largest digital insurance for entrepreneurs and self-employed
  • Money-Meets – Save money and improve finances
  • Clark – Insurance as easy as never before
  • MassUP – White-labeled platform for online insurance sales
  • FinanceFox – Your insurance hero

USA

  • Metromile – Pay-per-mile insurance (usage-based auto insurance)
  • Oscar – Smart, simple health insurance.
  • Zenefits – Online HR Software | Payroll | Benefits – All-In-One (EB distribution)
  • Policy Genius – Insurance advice, quoting and shopping made easy
  • Embroker – Business insurance in the digital age
  • Slice – On-demand insurance for the on-demand economy.
  • Trov – On-Demand insurance for your things
  • Cover Hound – Compare car insurance quotes from top carriers
  • Insureon – Small-business insurance
  • Bunker – The marketplace for contract-related insurance
  • Lemonade – Peer-to-peer renters and homeowners insurance
  • Cyence – Comprehensive platform for the economic modeling of cyber risk

China

The 5 Charts on Insurance Disruption

The high-level forces (people, technology and market boundaries) are responsible for insurance’s driving influences — new expectations, innovations and new competition that individually exert tremendous transformation pressure on the industry. The forces don’t operate in isolation, however. They are connected and combine to create an even more powerful and disruptive impact on the industry. Majesco developed a model to reflect these forces:

Screen Shot 2016-03-16 at 1.40.48 PM

The combined impact is creating a powerful market shift that brings the three together, creating unprecedented innovation and disruption. It reflects what author Malcolm Gladwell calls a “tipping point.” A tipping point occurs when an idea, trend, behavior or expectation crosses a threshold and spreads like wildfire, changing the fundamentals of business. These are often sudden, as we have seen in other tipping points over the last century, reflected in the move from the industrial age to the information age and now to the digital age. Each move created leaps in innovation and transformation.

People

The makeup of the market is shifting. Insurers who ignore the shift will be challenged to retain their customers, let alone grow their businesses. This shift is being driven by demographic, cultural, economic and technological forces. They present new challenges and opportunities for the insurance industry that will require insurers to rethink their strategies, products, channels and processes to reach a fast-changing market.

Screen Shot 2016-03-16 at 1.41.58 PM

Market Boundaries

The combination of the sharing and platform economy trends is dissolving traditional boundaries and the long-held competitive advantages of incumbents. Just as start-ups can now access technology as a service, they can also access resources (sourcing and crowdsourcing), designing, manufacturing and more as a service, giving any company access to the resources needed to compete. As a result, companies must compete on more than brand, product, price or distribution. They must compete on innovative approaches.

Screen Shot 2016-03-16 at 1.42.45 PM

New Entrants

Screen Shot 2016-03-16 at 1.43.24 PMScreen Shot 2016-03-16 at 1.44.16 PM

Shifts in the Industry

Screen Shot 2016-03-16 at 1.45.11 PM

To download the full report, click here.

digital innovation

The 7 Colors of Digital Innovation

InsurTech is now established in a class of its own, no longer a sub category of Fintech. In 2015, $2.65 billion of venture capital was invested in InsurTech. We now have InsurTech-focused accelerators, with the excellent Startupbootcamp in London, the Global Insurance Accelerator in Des Moines, Iowa, (about to start its second cohort) and Mundi Lab announcing its start-ups for its insurance program in Madrid.

In the past year, I have interviewed more than 50 InsurTech start-ups, and I have seen the full spectrum of characteristics and common themes that run through these innovative digital insurance businesses, which i call:

From Distribution to Data, the Spectrum of InsurTech

Red – Distribution

Distribution is all about making insurance easier to buy, consume and understand. Innovators put the customer first and build their insurance proposition from the customer out (unlike incumbents, which organize their business around internal capabilities).

These start-ups are all about the customer, and their propositions are characterized by convenience, on-demand, personalization and transparency (and, of course, digital).

Examples include;

  • Bought by Many
  • Knip
  • Cuvva
  • Insquik
  • PolicyGenius
  • Moneymeets

Orange – Enterprise

Here we see a new breed of enterprise-class software providers. These are software as a service platforms running on the cloud. They have consumption-based pricing models that replace the traditional, million-dollar, up-front license fee and multi-year implementation.

In the main, these InsurTechs have taken hold of the small and mediums-sized business (SMB) space, but it is a matter of time before they prove themselves as genuine enterprise solutions for Tier 1 insurers.

Examples include:

  • Vlocity
  • Zenefits
  • Insly
  • Surely
  • Riskmatch

Yellow – Mutual 

New peer-to-peer business models return insurance to its roots of mutualization and community. The model relies on the notion that social grouping and affinity will change behavior and address moral hazard (thereby reducing claims payouts and premiums).

The question of scalability still hangs over P2P insurance, but, if it succeeds as a business model, it could form the foundation of a new breed of insurer. Just as kids call to their parents in their hour of need, customers will call to the insurer in theirs.

Examples include:

  • Friendsurance
  • Guevara
  • TongJuBao
  • Lemonade
  • Uvamo
  • Gaggel

Green – Consensus

Blockchain technology will fundamentally change the way the insurance industry works (as well as banking and society as a whole, IMHO).

The promise is huge although as yet unproven. From smart contracts to identity authentication, from fraud prevention to claims management, blockchain technology will provide the underlying technology foundations for a trustless consensus that is transparent to all parties.

Examples include:

  • Everledger
  • Tradle
  • SmartContract
  • Dynamis
  • Blockverify

Blue – Engagement

For me, this is the most significant of the characteristics from InsurTech in personal lines. The product becomes integrated in the customer’s lifestyle. It becomes sticky and overrides the annual buying exercise, where price is the key buying criterion. Digital natives are responding well to lifestyle apps that sit on top of the underlying insurance product.

Examples include:

  • Vitality
  • Trov
  • Oscar

Indigo – Experience

The true value of insurance is only realized when the customer makes a claim. New tech solutions that improve the customer journey through the claims process will not only improve the customer experience, they will also reduce the cost of claims and claims payouts.

Examples include:

  • 360Globalnet
  • RightIndem
  • Tractable
  • Vis.io
  • Roundcube

Violet – Data

This is all about new sources of data to rate and underwrite risk. This is about using data science, machine learning, artificial intelligence and high-performance computing to process data in completely new ways.

While distribution is vital to change the way customers interact with insurers, it is the data players that hold the key to fundamental change in the way insurance is manufactured, especially in personalisztion of insurance premiums and policies.

Examples include:

  • Quantemplate
  • Analyze Re
  • Meteo Protect
  • The Floow
  • Fitsense
  • Influmetrics
  • RiskGenius