Tag Archives: Nigel Walsh

Distracted Driving: a Job for Insurtech?

The announcement of a change to the U.K. law that doubles the number of penalty points from three to six and fines from £100 to £200 for using a handheld phone while driving is a positive move to driving safety. But are we doing enough, or are are we still being too soft? Watching BBC Breakfast and seeing first-hand accounts of people who have lost loved ones to distracted drivers got me thinking that insurtech has a massive opportunity here.

One man had eight previous citations for distracted driving (yes, eight!). He is now serving a prison sentence because he couldn’t wait to send a text about taking his dog for a walk, and plowed into a cyclist at 65 mph.

How should we police this problem, with an already stretched police force and so many other competing priorities for time and funding?

See also: Of Robots, Self-Driving Cars and Insurance  

A quick quote from confused.com with just this one rating factor changed (adding a hypothetical six points to my record) meant a £128, or 36%, increase on policy cost to me, with a further 31% increase on my excess. The provider also changed in this example below.

However, a £200 fine doesn’t seem steep enough, does it? Make people feel it, make it £500 or £1,000. Maybe give people an automatic seven- or 14-day ban and make them think twice.

Perhaps we also need dedicated “pull over and use your phone here” areas along the road, to reduce temptation.

Confession: I have been guilty of checking my phone at traffic lights or when stopped. I have always had hands-free kits so have never held the phone for a conversation, but arguably even with hands free this is still distracted driving. Where is your attention when you are deep in a conversation?

My seven-year-old is my best educator. If I go to look at the phone, I get a large loud “daaaadddddyy” from the back seat.

Sadly, the driver awareness courses that are given out (instead of points) are only available if you have committed the offense. Shouldn’t education be ahead of the game? Prevention is a better cure. Let’s get it into our schools and from a very young age.

History shows we can make progress. Seat belts have become compulsory (1983 for those in the front of the car, 1991 for all passengers). Drunk driving has gone from being somewhat expected to now being taboo.

Enter insurtech.

Technology has a huge opportunity here, but there must be a stronger collaboration between motor manufacturers, device makers and policy makers.

Why not have your steering wheel do a quick test on your alcohol levels from your hands and, should alcohol be detected, apply Uber-style surge pricing? “Nigel, your price for this journey is 1.8x as your blood alcohol level is above the normal.  Please drive safely. Alternatively, an Uber can be here in six minutes if you would like a ride home.”

See also: Cars: What’s Driving Disruption and Change  

Lets not stop there. We could go one stage further and disable the car from even starting if you are over the limit. Some Ignition Interlock systems are already available to do a breath test before you can start the car.

As for distracted driving, when your mobile connects to the car, most of the functions should be disabled, unless you are stationary. You can not watch a movie or change the sat nav on many cars already for the very same reason. Waze users will be familiar with the following screen.

Distracted driving is, of course, more than just phones and apps; it’s arguably eating, drinking, smoking, crying children in the back seats, but this is today’s problem we are solving.

Like many who will read this, I am a son, brother, husband, dad and friend. I could not even fathom my life to be profoundly changed for the sake of answering an email, text or checking something else that simply could have waited.

One of the most simple campaigns over the years is the #REDTHUMBREMINDER,

What do you think? Something insurtech can and should address?

Next Big Thing: Robotic Process Automation

The focus for the last 10 years in insurance has been around how to streamline business processes to increase efficiency and create better experiences for customers and employees. New technologies including Robotic Process Automation (RPA) have become one of the next big things, not just in this industry but across many. For insurance, promising to automate processes and customer interactions that currently require lots of human involvement, primarily due to so many applications to swivel in and out of to deal with customer and broker requests – often add little value and distract the insurer from the most important person in the journey, dealing with the customer.

Now organizations are beginning to take it a step further, coupling RPA with cognitive technologies including Machine Learning and speech recognition that can give these bots new power to learn and increase their ability to communicate intelligently. This is especially useful for those tasks that aren’t just routine, but that require judgment and perception.

See also: Stop Overpaying for Pharmaceuticals  

These new technologies will increasingly help firms gain customer loyalty, making the mastery of these cognitive capabilities a key differentiator when competing with customer centric insurtechs.

In fact, 83% of technology professionals believe there will be a cognitive tipping point in the next five years. While the RPA market today is still relatively small, the technology is gaining traction as a cost-effective alternative to traditional systems integration and is projected to become a $5 billion market globally by 2020, with a CAGR of over 60 percent.

Platforms including Microsoft Azure and IBM Watson have made these cognitive services more readily available and easier to consume, meaning that these technologies are no longer in our future, but they are very much in the here and now.

How does Robotic Process Automation Impact Insurance?

In the insurance industry, these automation capabilities enable more focus and time spent on the customer, and can mean better experiences not only for customers but for employees and agents as well. Specific examples of processes that are being automated through RPA are first notice of loss, fraud checking and policy renewal, including data gathering and recalculating policy premiums. Some of the key benefits include:

Reduced error rate from human processing

Robots don’t make mistakes or judgement calls, and they don’t get tired. With routine processes completed accurately, every time, you don’t need to allocate resources for making corrections.

Cost Savings

With automation of work processes, operational costs are reduced and no additional resources are needed, increasing ROI.

Increased Productivity and Efficiency

Robots don’t take coffee, lunch or holiday breaks. This means 24/7 monitoring and processing, increasing speed, efficiency and productivity. With robots taking over labor-intensive administration tasks, it frees up your employees for more high-value activities. Now employees can focus on those tasks that can’t be automated, like customer service.

Scalability and Flexibility

The ability to replicate robotic tools across geographies and business units increases scalability and flexibility.

An example of a successful RPA implementation is a large consumer and commercial bank that redesigned its claims process and deployed 85 software robots, or bots, running 13 processes, handling 1.5 million requests per year. As a result, the bank was able to add capacity equivalent to around 230 full-time employees at approximately 30 percent of the cost of recruiting more staff. Additionally, the bank recorded a 27 percent increase in tasks performed “right first time.”

On the flipside, there will always be exceptions where automation needs human intervention (often described as attended vs unattended automation). When there is an exception, it needs to be handled with a greater level of understanding and experience to quickly manage it through the process and get it back into automated mode as quickly as possible.

How can your organization prepare for these cognitive gains and take advantage of new technologies?

At Deloitte, we have already deployed RPA software at scale with clients’ organizations and within our own internal support process. Deloitte is advising on the application of emerging cognitive tools through the lens of the customer, and through this process we have come up with 7 Robotic Skills that can drive new types of automation.

By breaking down these skills to figure out a) which specific tools deliver each skill and b) which skills are needed for your specific business case, you can figure out what means for your business.

Once you have figured this out, it is important to understand that the journey to automation starts with a proof of concept project, starting small and proving out the value. This can take as little as two weeks, with a live pilot up and running within two to six weeks, depending on the complexity and use cases. With success, you can quickly scale to a center of excellence where all areas of the business can automate their individual processes, leveraging a common set of skills, integration and people.

This type of robotic and cognitive technology ultimately needs to be embedded in software applications that manage processes for the customer experience. To deliver the right software, you need to be able to rapidly experiment at low cost. To maintain momentum and speed, low-code platforms provide another layer of abstraction, enabling organizations to easily embed cognitive technologies in custom web and mobile applications.

Low-code platforms foster low-cost, high-value, rapid experimentation. RPA is now widely known and understood to an extent. I even recall some of the companies being Composite Applications or Mashups if you go back 10 years; However, most are just beginning to explore the use of robotic process automation, dipping their toes in the water, and with it being such a nascent technology, it is essential to test and learn quickly. It is important to remember that bots can do much more than automate routine processes. Implementing RPA is just the one of the many ways organizations are looking to digitize their businesses and tap into the power of cognitive technologies.

Motor Insurance: Get Back to Value!

My mom called me last night to say her car insurance is going up from  £340 to £370  (from $420 to $457) in the year ahead. She can’t get it any cheaper and is genuinely worried about why the price is increasing.  Her rationale is that she isn’t driving very much, is getting older and hasn’t made a claim, so why has the price gone up?

For me, this highlights part of the problem. My mom has never made a claim (thankfully), and she is basing her experience on cost, convenience and fit for her driving needs, instead of value. Yet, her car insurance is going to get more expensive next year. I don’t think that she is unique here in any way, (other than being my mom; I could list plenty of ways she is unique) because when it comes to motor and home insurance, this is the typical journey for many.

I explained to her that there has been an increase in the Insurance Premium Tax (IPT) to raise more revenue in the insurance sector. In reality, the price of her car insurance hasn’t gone up much (only 7%). But because of the additional IPT, it may feel like the price has gone up. To me, the provider missed an opportunity here to share what has changed and why. Providing customers with a simple insight, in this case on the IPT, could be very beneficial for both sides.

See also: Microinsurance Model in Non-Standard Auto?  

As I sit here getting ready for my next trip, I’ve had two emails. One from the airline and one from the hotel. I’ve since checked in for my flight and checked into the hotel, received my boarding pass, chosen my seat, selected my room and enabled my digital door key – all in less than five minutes. This is proof that the digital experience just gets better and better. Over the years, table stakes have kept on rising, so the bar is pretty high – people must continually create better, new experiences and more barriers to entry. In my words, this whole experience is becoming more and more frictionless! I continue to challenge all of us on how we can apply the same idea to our world of insurance – making car insurance frictionless.

Related to this, at Deloitte we have just released our European Motor Survey, where we interviewed more than 15,000 people across Europe, Middle East and Africa (EMEA). This year, we explored how digitally enabled motor insurance products could provide insurers with a great opportunity to increase the contact points with their customers and dramatically improve the understanding of their needs.

You can download a copy of the survey here. We estimate that by 2020 the market share for digitally enabled motor insurance issued in Europe could reach 17%. Some highlights have been included below in the infographic.

Given my experiences this weekend, from both the preparations for my trip and m mom’s renewal, the opportunity to continue to leverage digital still remains.

As always, I welcome your feedback, thoughts, insights and discussion!

10 Predictions for Insurtech in 2017

It’s time to reflect on the passing year, mark my predictions from last year and throw some light on what I see 2017 holding in store.

In my post from this time last year, I made a number of predictions, so, now, I wanted to look at how I did. Feel free to jump in and see how close to the mark I was and share your perspectives.

Reviewing 2016 — How did I do?

1. Fintech and insurtech.  In last year’s piece, I said that 2015 was the year of the zone, loft, garage and accelerator and that this would continue in 2016 with more focus. Regarding fintech and insurtech, I was right. We have seen some heavyweight investment (more so in the U.S. and Asia) and no major failures, to my knowledge. Trending up. Points: 1. 

2. Evolution of IoT. In 2015, I wrote, “2016 will be the year we all realize (IoT) is just another data/automated question set.” Evolution here is continuing, but not at the pace I expected. New firms such as Concirrus (and many others) have come up with some great examples of managing and leveraging the ecosystem. Points 2.

3. Digital and data. At the end of last year, I said 2016 would continue to be a big area of growth for both. There’s been progress, yes, and pace and traction ahead of what’s expected. Points 3.

4. M&A will continue but will slow. I think this has slowed this year, with two of the three major regions in the latter half of the year focused on Brexit and the U.S. election. Now, folks are trying to work out where that leaves fintech/insurtech. Points 4.

5. Will the CDO Survive? I said I thought we’d see a move back to the chief customer officer. Well, no sign of my chief customer officers yet! (Although, after writing this, I came across three chief customer officers, so it’s a start). Have you ever asked an insurance company or people inside the company “who owns the customer?” To me, we’re still product-centric rather than customer-centric. Points 4.

6. New business models. I said last year that we’d need to be clear on what the new business model will be — and what it needs to be. This year, there’s been lots of talk in this area, including here at Deloitte in our Turbulence Ahead report. We identified four business models for the future: 1) Individualization of insurance, 2) Off-the-shelf insurance, 3) Insurance as utilities and, finally, 4) Insurance as portfolio. It may take longer for this to materialize, but, without doubt, these models are coming. See my colleague Emma Logan describe these here. Points 5.

7. What we buy and sell. I believed that, last year, we’d move away from a product mindset to become more relevant and convenient. But we’re still in talking mode, although the ideas here are evolving rapidly. Expect an all-risks policy in Q2 2017. Points 5.

8. Cyber is the new digital. There has been an increase in the number of products and players, but there still hasn’t been any personal cyber policy. I expect that to come in 2017 still. Points 6.

9. Partnerships and bundling. In 2015, I thought we’d see a big rise in the partnerships between insurers and third parties. That’s happened. Points: 7.

So I’m marking my 2015 predictions as 7/9 (or 78% ) — a good effort, but I may have been a bit too ambitious.

See also: 4 Marketing Lessons for Insurtechs  

Moving into 2017

Re-reading the above, I still feel all my predictions are valid, be it the end of the CDO, the birth of personal cyber or an all-risks policy. I’ve been involved in enough conversations over the last 12 months to say these are all very real, although some are closer to seeing the light of day than others.

Moving into 2017, here are my top 10 trends to watch:

  1. Speed. Almost all conversations about insurance start with a statement that we’re not moving quickly enough — from transforming and modernizing the legacy estates to quite simply getting products to market quicker. We can no longer wait six months to launch new or updated products. Look at those who managed to capitalize on Pokemon Go insurance cover. In insurance, we’ll move from fast walking to jogging and sprinting. But take caution: This is still a marathon, and there’s still a long way to go. In fact, as Rick Huckstep wrote recently, the sheer speed at which the insurance market has grown in the last 21 months is part of the challenge and attraction.
  2. AI, cognitive learning and machine learning. AI has been long bandied around as a material disruptor. On the back of collecting/orchestrating the data, it’s critical to drive material insight and intelligence from this and allow organizations, brokers and consumers to make subsequent decisions. In 2017, AI will come of age with some impressive examples, including voice. In 2016, we saw Amazon’s Echo and Google Home product launches, as well as some insurers — like Liberty Mutual — giving voice a try. Imagine asking freely, “Am I covered for…?” or, “What’s the status of my claim?” Adding this skill to the mix will likely be table stakes. In addition, AI will augment other solutions to drive value, e.g. robotic process automation, which I wrote about here. All this boils down to getting a better grip on the amazing data we have already while leveraging the vast open data sets available to us.
  3. Line of business focus shift. The insurtech world will make a definitive shift from all the wonderful personal line examples to SME (the next obvious candidate) and to more specialty and complex commercial examples. Will Thorne of the Channel Syndicate wrote a great piece on this in November. While the challenges are harder and more complex, I believe the benefits are greater once we get to them.
  4. Believers. The market has polarized somewhat between those who believe in major innovation and are pushing hard, and those who don’t (or have a different focus and near-term objectives). The range is from those who worry about the next 90 days/half-year results to those who are actively looking to cannibalize their business and investing to find the most efficient way to do this. Here, there’s no right or wrong, with hundreds of organizations strewn across the path. I still believe more will move to the cannibalization route as the first carriers start to unlock material value in 2017, including continued startup acquisition. Oliver Bate (Allianz) had an interesting and positive perspective on this during his company’s investor day in November.
  5. Scale and profitability. Over the last 12 to 18 months, I’ve seen some great startup organizations; internal innovation and disruption teams; VCs; and more. Now is the time to work out how we industrialize and scale these. This is the very same challenge the banking and fintech communities are going through. If you’re an insurance company with 30 million or 80 million global customers, should you be worried about Startup X that has 10,000 or 100,000 customers? If they do manage to scale, can they do so profitability? This reminds me of a recent article about how unprofitable Uber is, but, with millions of engaged customers, they have our attention now. Profitability will become front and center. In fact, Andrew Rear over at Munich Re Digital Partners put together a good post on what the company looks for and why he and the team chose the six they did.
  6. Orchestration. With all of these startups in insurtech, we’ll need to quickly understand what role they play. Are they a platform play, end product play, point disruptor or something else? Regardless, given the volume and velocity of data generation, the importance of both API connectivity and the ability to orchestrate it will increase dramatically. For me, these are table stakes.
  7. External disruptors. In the Turbulence Ahead The Future of General Insurance report released earlier this year, we identified six key external disruptors that are happening regardless of the insurance industry. These are 1) the sharing economy, 2) self-driving cars and ADAS, 3) the Internet of Things, 4) social and big data, 5) machine learning and predictive analytics, and 6) distributed ledger technology. The key for me within insurance is to identify what role we’ll play. I believe we’ll continue to firmly be the partner of choice for many given our societal and necessary position in the global economy.
  8. Micro insurance. Here, I specifically mean the growth of micro policies, covering specific risks for specific times. Whereas we typically annually see 1.1 policies per customer, we’ll see eight to 10 micro policies covering a shorter period (episodic or usage-based insurance) as per our business models described in the Turbulence Report. This will be true for all lines of business. We’ve already seen some great launches in this space — including Trov, which partnered with Munich Re in the U.S., AXA in the U.K. and SunCorp in Australia. There’s been global access through partnering with established players that has created a new way to market to the next generation. While we switch this on manually by swiping left and right (given some of the external disruptors and location based services), this will very much be automatic going forward. Insurers will need to find new ways to orchestrate, partner and find value to bring in clients. It won’t be just one policy, it will be many that they orchestrate to deliver clients everything they need.
  9. Blockchain and DLT. I almost didn’t include blockchain here, but two factors have led me to include this for the first time: 1) the number of requests we’re now seeing in the market for both specific solutions and more education/use cases and 2) the fact that nine of the 18 startups in the FCA’s new Sandbox are blockchain-related. In 2016, we saw lots of PoC examples, trials and the first live insurance product on the blockchain (see: FlightDelay). Some use cases are more developed than others, and some markets are more suitable than others (I’m still looking for good examples in personal lines), so I believe this will evolve in 2017 but that there won’t be scale breakthroughs. However, along with the World Economic Forum, I firmly believe that “The most imminent effects of disruption will be felt in the banking sector; however, the greatest impact of disruption is likely to be felt in the insurance sector.” We still must ask, “why blockchain?” Just because you can use it? It needs to be the right solution for the right business problem. Horizontal use cases such as digital identity or payments offer compelling use cases that can easily be applied within insurance. In many ways, blockchain, for me, feels much more like an infrastructure play in the same way we would do core systems transformation (policy, claims, billing, finance, etc.)
  10. Business as usual — for now! Partly related to No. 4, we still need to run our business. How we do this and how we set up for the future will be another challenge — not just from a technology perspective but from a people and organization design perspective. (How we work, collaborate and more.) What are the transition states from our current models to a new world in 12, 24 or 36 months. Forward-thinking organization are putting plans in place now for their organizations in the years to come. This will become more important as we embed, partner and acquire startups and move toward new ways of engaging and working with customers.

Interestingly, there are now also so many accelerators, garages, hubs, etc. that startups all now have a lot of choices regarding where to incubate and grow. This presents a whole new challenge on the rush to insurance disruption.

See also: Asia Will Be Focus of Insurtech in 2017  

Finally, there are two other observations I wanted to share:

  1. China. While I don’t spend any time in China, it’s hard not to be in awe of what is going on — specifically, the speed and scale at which things are happening. China’s first online insurer, Zhong An, did an interview with Bloomberg regarding what the company is doing with technology (including blockchain) and, more importantly, its scale ($8 billion market cap in two years, 1.6 billion policies sold) — and the only concern from the COO, Wayne Xu, is that the company isn’t moving quickly enough! Step away from this and look further to what’s happening with disruption in general with Alipay and others from the BAT (China’s equivalent of GAFA — Baidu, Alibaba and Tencent) is simply amazing. There’s a good FT article on Tencent, the killer-app factory, and the sheer speed and scale of disruption.
  2. Community. The global insurtech (and fintech) community is an amazing group of people from around the world who have come together across borders and time zones to further challenge and develop the market. Each geography has its own unique features, mature players, startups, labs, accelerators, regulators and, of course, independent challenges. We don’t always see eye to eye, which makes it all that more rewarding because you’re challenged by industry veterans and outside-thinking entrepreneurs. This year’s InsureTech Connect in Las Vegas with more than 1,600 people was truly amazing to see. Things have clearly moved far beyond a small isolated hive of activity with varying levels of maturity to a globally recognized movement. It was great to meet and to see so many carriers, startups, VCs, regulators and partners looking to further the conversation and debate around insurance and insurtech. This community will, no doubt, continue to grow at a fast pace as we look for insurtech successes, and I look forward to seeing how the 2017 discussion, debate and collaboration will continue.

As always, I look forward to your feedback! What I have I missed?

Here’s to an exciting 2017!

The Shift to Frictionless Insurance

Loic Le Meur, who many will know from Le Web Conference and his new startup, Leade.rs,, had a great interview with Alex Dayon, the president and chief product officer at salesforce.com, about how owning a car is almost obsolete. It got me thinking about our shift to utility-based living and what it means for insurance.

In a land where an Englishman’s home is his castle, the car is often seen as the next most expensive asset a person will purchase, so the move away from ownership is great.  And the car is just the start. Now, start to add bundles such as insurance, maintenance and fuel. These sorts of schemes give the best of both worlds because you get to choose what model you try. Do you want a weekend utility, something bigger for holidays away or something smaller for whizzing around town? These new levels of flexibility will absolutely become the norm.

See also: Connected Vehicles Can Improve Claims  

Many of us are used to utility today — prestige car hire, AirBnB, vacation rentals, handbagspets and so much more! The sharing economy is continuously expanding. The key changes here for me are the added convenience because of technology (think about calling a taxi 10 years ago vs. calling one today with an app) and then business models that have changed to deliver micro experiences.

Cuvva is doing the same in insurance with policies available by the hour. While that’s a brilliant idea, I’d almost argue we can get too granular sometimes. We need to be clear on what the pivot point is — it’s just different for different people in different circumstances. If you have ever been to IKEA or something like it, you often find vans in the parking lot that you can rent for an hour because you have bought more than your car can hold.

See also: Beat Brain Drain: Boost Your Talent Pool  

These sorts of schemes change the entire competitive landscape. The winners here will be those companies that provide frictionless experiences that are both relevant and convenient.

Of course, frictionless won’t be for everyone. Your choice will depend greatly on where you live (inner city, suburbs or rural areas). Some look at moving away from ownership as another bastion of losing control. That said, think about how many more hours a day you’d get back to do enjoyable or more meaningful stuff. Time is the most precious entity — period. This is the new generation; experiences far outweigh things, which, coincidentally, makes us all happier, too!

As the old saying from John Paul Getty goes, “If it appreciates, own it. If it depreciates, rent it!”

As we move further and further in this newly accepted world, insurance will form part of the experience bundle, whether you knew it was there or not. The important thing is being reassured you have it and that you have it at the right level.

As I picked up a rental car in Dublin Airport, I got a hard sell about reducing the €1,500 standard excess with better insurance for just €20 per day. While I understand why companies do this, it kind of makes me sad and gives insurance a bad name. How many take out this extra cover? Now is the time for carriers to focus on the partnership opportunities that come with renting and to come up with better approaches.

No matter what, I’m looking forward to trying lots of different cars without the hassle of owning any through new apps and business models that allow me to try things I would never be able to own.