Tag Archives: ping an

Asia: Latest Source of Opportunities

We often get asked where you should go when you want to be inspired by insurance innovations. We always answer that people should look at Asia more seriously.

Think of giants like Ping An and Zhong An leading the way. Think of innovative solutions in the health sector such as Ping An’s Good Doctor and Tencent’s Waterdrop. Or ecosystem plays such as Rakuten, Grab and GoJek.

An important catalyst in developing the Asian insurance market is Invest Hong Kong. Hong Kong is one of the world’s leading fintech and insurtech hubs. Hong Kong has 165 authorized insurers (as of August 2020), and the total gross premiums of the industry was $74.4 billion in 2019 (9.1% growth compared with 2018). With 34 insurers having their regional headquarters in Hong Kong, the city serves as a breeding ground for fintechs and insurtechs that aim to conquer Asia. InvestHK plays an instrumental role in making all of that happen. That is why we sat down with Stephen Phillips, director-general of investment promotion at InvestHK, and King Leung, head of fintech at InvestHK, to have them share their thoughts on the flourishing insurance industry of Asia.

In your view, why is Asia taking the lead in accelerating digital transformation in the insurance industry?

Stephen Phillips: “The Asia-Pacific region is home to nearly one-third of the world’s population and several of the fastest-growing economies. Because of the sheer population size and growth, Asia is already playing a key role in shaping the future of insurance. More importantly, insurance penetration is less than 5% in India, Indonesia, mainland China and Malaysia, signaling a significant amount of unmet demand in Asia-Pacific’s developing markets. In Asia, the insurance industry is all about an inclusive growth mind-set, customer relevance and speed. Growth is established by expansion beyond the traditional distribution channels, product innovation and building new business ecosystems. Regarding customer relevance, in Asia, insurance is not seen as a compulsory product but as a primary product for savings and protection, playing a very relevant role in the lives of clients. Customer expectations in the Asia-Pacific region are the highest in the world, especially around digital interaction and experiences. Because of the growth mind-set, insurance markets in Asia are evolving quickly. To stay on top of fast-changing customer needs and market landscape, Asian insurers have learned to make decisions fast.”

Let’s talk about the Greater Bay Area, set up by the Chinese government to integrate Hong Kong, Shenzhen, Macau and eight southern mainland cities into a 72 million population market and a leading hub for innovation and economic growth. Can you share a bit more?

Stephen Phillips: “The Greater Bay Area (GBA) Initiative encourages further internationalization of China, where mainland Chinese customers can access more international financial products through Hong Kong. Likewise, overseas companies can access financial products and RMB assets from China. In May this year, the People’s Bank of China and the mainland Chinese regulators have announced an updated framework of four core areas and 26 specific segments of financial services where different extents of opening up and transformation among the 11 cities in GBA are encouraged going forward. With a GDP of $1.68 trillion in 2019, the GBA would be the 11th largest economy in the world, just behind Canada and ahead of Russia. There are endless possibilities in this exciting development!”

Which role will Cyberport play in the development of the startup ecosystem in Hong Kong?

King Leung: “Cyberport functions as Hong Kong’s digital technology community. It is home to about 1,400 digital tech companies, including more than 380 fintechs. It is the largest fintech and insurtech community in the city. This community also consists of many startups, including several of the newly licensed virtual banks, as well as established enterprises such as insurtech unicorn ZhongAn, AWS and Microsoft. These tech companies focus on several areas: AI, blockchain, big data, cybersecurity, insurtech, wealthtech, etc. Cyberport also runs its own Cyberport Macro Fund, where it co-invests in promising companies with other private investors.”

We’ve been there. It’s huge. Almost a city quarter.

King Leung: Yes – it’s a big business park consisting of four office buildings, a hotel and a retail entertainment complex. Cyberport is wholly owned by the Hong Kong government. The mission is to help youth, startups and entrepreneurs to grow in the digital industry. Cyberport is connecting them with investors and strategic partners such as local and international business partners, established insurance companies. Cyberport is Hong Kong’s flagship digital technology hub. It is committed to inspire innovation and accelerate digital adoption. We all believe in the importance of ecosystems. To develop and enhance the fintech and insurtech ecosystem, Cyberport provides local and overseas fintech companies a jump start to success, for instance, by offering full-range entrepreneurship support and value-added services.”

Apart from Cyberport, are there any other key stakeholders that help the overseas insurtech companies launching in Hong Kong?

Stephen Phillips: “The Insurance Authority (IA), the Hong Kong insurance regulator, has been closely monitoring the development and application of technology in the insurance industry and proactively assisting market participants to tackle insurtech-related regulatory issues. IA’s Fast Track program offers a dedicated channel for new authorization applications from insurers using solely digital distribution channels (i.e., without the involvement of intermediaries) to provide insurance products with a simple structure and high protection element. Between December 2018 and May 2020, IA has granted four digital insurance licenses (two life and two non-life). In addition, the IA launched an insurtech sandbox in September 2017 to facilitate a pilot run of innovative insurtech applications by authorized insurers to be applied in their business operations. In addition to IA, Hong Kong Science and Technology Park (HKSTP) also acts as an important facilitator to Hong Kong fintech businesses. Its Incu-App program, for instance, provides startup support to companies working on business innovation during their inception stage, with a full range of tailor-made support services and facilities that will help drive their business to the next level of development.”


How will China’s insurance industry benefit from the flourishing insurtech ecosystem in Hong Kong?

Stephen Phillips: “The Greater Bay Area will introduce more and more opportunities. In May 2020, the People’s Bank of China and the leading regulators announced an updated blueprint for opening up the financial services sector in the GBA across four core areas and 26 financial services segments, including insurance. As the population in the Greater Bay Area has one of the highest GDP per capita in China and are more aware of insurance, demand for insurance will naturally increase. This trend will lead to more insurance companies setting up and expanding their presence in GBA. As more international competitors enter the market, more choices are made available to the GBA customers. At the same time, the intensified competition will lead to more innovative digital features and better customer-centered solutions. To get a piece of China’s booming insurance industry, insurers must leverage technology. To ensure that insurers market growth and scalability, digital distribution channels become a crucial success element.”

The flourishing Asian markets are obviously attractive to fintechs and insurtechs …

King Leung: “Definitely. The Hong Kong fintech and insurtech scene has experienced incredible growth in recent years. As of 2019, more than 600 fintech companies have set up their businesses in the city, among which 53% see Hong Kong as a base for global expansion and 51% operate/plan to expand in the Greater Bay Area. The world-class capital and private investment market in Hong Kong also provide the necessary fuel to accelerate the growth opportunities. From 2014 to 2019, private investment in HK-based fintech companies reached a total of $1.5 billion. In addition, over $10 billion have been raised through fintech IPOs. In 2019, Hong Kong also invested $1.3 billion in nurturing local tech talent, and $64.1 million in attracting overseas tech talent. To support the fintech community on employment amid the COVID-19 pandemic and nurture talent, the government launched the Fintech Anti-epidemic Scheme for Talent development (FAST), where fintech companies will be entitled to a subsidy for talent recruitment. With a total funding amount of $15.4 million, the scheme is designed to create 1,000 fintech-related jobs. Hong Kong (and surrounding cities in the GBA) are home to a huge and diverse talent pool in finance and technology. The local education system is also internationally acclaimed; many universities and institutions have launched fintech-specific programs from BSc to PhD to online professional training in recent years. This talent pool equipped with the latest skills and knowledge in finance and technology provides Hong Kong with a strong foundation for further fintech development going forward.”

As a global city, Hong Kong is attracting people from all over the globe.

Stephen Phillips: “Hong Kong also enjoys an ideal geographical location in Asia. This enables businesses to seize opportunities in the Greater Bay Area and throughout the rest of the region. Many people are drawn to Hong Kong because of the vibrant lifestyle, beautiful scenery, convenience and welcoming international community. The international business community reflects this, allowing businesses of all types to thrive in the city. Hong Kong is also one of the safest cities in the world to live in due to its relatively crime-free society.”

Hong Kong has been recognized as one of the world’s most competitive economies. The ranking reflects Hong Kong’s consistent strides in building a favorable business environment. Can you describe the benefits of Hong Kong’s open business environment?

King Leung: “Opening businesses, for instance, is easy and remains inexpensive. Foreigners can be sole directors or shareholders in a Hong Kong company. There are no restrictions of nationality. InvestHK makes it easy for companies to open up their offices in Hong Kong with all sorts of free facilitation services. InvestHK assists with opening bank accounts, arranging work visas and work permits, helping you find the most optimal office space, etc. and introducing you to the key insurtech stakeholders. We also just kicked off a Global Fast Track program in mid-August for startups around the world as a key element of our flagship annual Hong Kong Fintech Week event on Nov. 2 to 6. We invite fintechs from around the world to participate in the FastTrack program, where we offer support from government funding for business matching with financial services institutions and private fintech investors. The Hong Kong government also encourages business development by providing one of the most tax-friendly systems in the world. And, most importantly, business opportunities can be maximized by taking advantage of the business infrastructure in place. People are open to do business. We’re more than happy to help make the right connections and help you succeed in Hong Kong.”

About InvestHK

Invest Hong Kong (InvestHK) is a department of the Hong Kong Special Administrative Region Government tasked with attracting foreign direct investment to Hong Kong and providing overseas and mainland companies and entrepreneurs with information, advice and services they need to succeed in the city. It works with companies of all sizes, from startups and SMEs to multinationals, and it supports them in every stage from planning, setting up to promotion and expansion.

The staff stationed in 32 offices in key markets worldwide reach out to potential investors and work to strengthen and promote Hong Kong’s status as Asia’s premier investment destination. All of the services are free, customized and confidential and based on the core values of passion, integrity and professionalism. InvestHK strives to provide the best customer service combined with business friendliness and responsiveness.

When the Hong Kong government decided to step up the focus on fintech and insurtech promotion, InvestHK set up a dedicated fintech team with physical presence in Hong Kong, Guangdong-Hong Kong-Macao Greater Bay Area, London and San Francisco to engage with fintech and insurtech companies to raise the profile of Hong Kong as a fintech and insurtech hub. With their vast network in the private sector, they are a conduit for business.

Written by Roger Peverelli and Reggy de Feniks, Founder of The DIA Community. Originally published here.

8 Insurtech Predictions for China in 2018

This post, which describes recent news coming from insurtech and digital insurance in China, was written for Daily Fintech by Zarc Gin from Insurview from within China.

Happy New Year!

It has been a great honor for me to share insurtech developments in China since last November. I hope my posts here help you understand what’s happening in China, so you can either learn from the experiences or even develop businesses opportunities in China.

Today, I’m going to share the predictions we made about insurtech in China in 2018. They are a combination of opinions, ideas, trend analyses and hopes.

1. More funds, more IPOs

We have seen huge amount of funds pouring into digital insurance in China, and top startups are well-funded. Because of the successful IPO of Zhong An, investors are looking for the next big name in digital insurance. Top startups are also aiming for IPOs to catch up with Zhong An. So the fever of digital insurance will enter the next level, with huge funds and IPOs in 2018. My forecast is that Ping An Good Doctor, a Ping An Group subsidiary, will be the first insurtech IPO this year.

2. More digital health insurance

Premium income of health insurance has been growing quickly since 2011, with 404.25 billion RMB ($62.32 billion) income in 2016 and a 68% growth rate. Exalted Life was one of the most popular health policies from Zhong An in 2016. Ping An also launched E-home and E-life, which were well-received. The competition of digital health insurance got more intense in 2017 with the launch of Wesure. So, the competition will continue, and health insurance will be even more widely received in 2018.

See also: How Is Insurtech Different in Asia?  

3. Opportunities for B2B startups

Over the past two years, B2C startups were in fashion. But the digitalization of the whole insurance industry is far from accomplished, and the infrastructure of insurance is still in its early stage. Therefore, the potential for B2B startups will be big in 2018.

4. Rise of a new type of broker

CIRC has been trying to weaken bancassurance channels in China. This led insurers to seek the support from broker companies, and the insurance intermediary industry is expanding with this opportunity. Life brokers like Mingya and EverPro are growing quickly. Focusing on quality of individual brokers is their key difference from traditional broker companies. Digital broker companies like Tuniu are also growing rapidly with the help of e-commerce resources. We believe brokerage will have a new age in digital insurance, and both the life and property sectors will grow significantly in 2018.

5. New look on auto insurance

With regulation on auto insurance tightening, the combined ratios for auto insurers are increasing. To reverse the situation, auto insurers need to grab the digital opportunity and develop policies from the perspective of customers. We believe digital auto insurer will explore the possibilities in the digital age and make a difference to the current auto insurance.

6. Opportunity in data and information

Insurers are connected with their customers’ lives, so they will have access to all the data generated, such as health, habits and behaviors. Data can show insurers where the world is going, so there will be a huge opportunity in data collection and analysis.

See also: Top 10 Insurtech Trends for 2018  

7. Globalization

The world is getting smaller thanks to the internet, both for China and for other countries. The interaction between China and the world is getting more and more frequent. Foreign insurtech companies such as Singapore-based CXA Group are exploring Chinese markets, and Chinese insurers like Fosun and CPIC are implementing their plans around the world.

8. Talent liquidity

Tencent, Alibaba and Baidu all entered digital insurance in 2017. They will heat up the talent liquidity in this industry. We will see an increasing combination between tech talents and insurance talents in the future.

This article first appeared at Daily Fintech.

8 Characteristics of Pull Platforms

In our previous post, “Five Strategies to Fight Price Comparison,” we argued that, with regard to customer engagement, Google, Apple, Facebook and Amazon, the companies that are so much feared by insurers, have in common that they literally carry pull in their genes. Obviously, there is so much insurance carriers can learn from them. We therefore decided to analyze the pull platforms of these companies, but also of the first financial institutions, fintechs and insurtechs that have established successful pull initiatives, and last but not least outside the industry best practices from among others Nike, Danone and Unilever – in total some 30 pull platforms.

Our analysis revealed that these 30 pull initiatives all have their own mix of eight key characteristics: (1) they solve real problems, (2) leveraging content, tools and connections, (3) building communities, (4) thinking beyond customers, (5) looking beyond data, (6) fostering beyond their traditional vertical, (7) using network effects (8) and creating unconventional value.

Let’s take a closer look at each of these eight key characteristics, each illustrated by a best practice. We deliberately used examples from outside the insurance industry, to spark your imagination.

1. Solve Real Problems

Successful pull platforms solve real problems in an unconventional way. Not just frictions, but the real problem; the problem behind the financial need. Using technology, they enable their customers to be more in control, to learn and be better informed, to make better and faster decisions and to get better service, geared to their need.

Nike+

Each time I go running, I activate the Nike+ running app. It registers distance, speed and routes, I can track my progress over time, connect with friends to keep each other going or compete and when I’m traveling. It helps me to find popular routes in cities abroad.
Nike+ is changing the conversation with its customers on all levels: business model, brand, proposition and customer experience. Nike’s proposition now is no longer about shoes that may or may not have shock-absorbing soles. It’s also about a range of new services that key in on real underlying needs: making athletes enjoy their sport even more. While, obviously, Nike could easily use all the information to determine exactly when you need a new pair of running shoes, Nike is becoming a company that isn’t just focused on products and sales, but also on creating services and building relationships.

Alipay

“Solving the real problem” is less trivial than it may sound. Let’s take Alipay, the successful payment system of Alibaba, used by millions of shop owners and other merchants throughout China (and beyond). Sabrina Peng, president, Alipay International, shared with us: “Alipay isn’t just about payments; it’s about customer relationships. The whole idea is to bring more value to the merchants and to the users. Payment is nothing more than just a part of the purchase cycle. Merchants don’t want a new payment system. They want more customers.” This insight is Alipay’s starting point to assist retailers in connecting with Alipay users in all sorts of ways. Merchants can use Alipay to market their services, including special offers, coupons or vouchers. Alipay users can see all the merchants nearby, see pictures, use unique discount codes and post reviews – resulting in more traffic, customers and revenue for merchants. The payment system plays a key role in the model but resides in the background.

Alipay shows that it is essential to really understand the context to provide real added value and to play an active role in the ecosystem of that context. People are not interested in a mortgage, but in a house. The context of a nice house and easy living offers more opportunities to add value to customers than just the mortgage, or the home insurance, and more opportunities for new revenue streams.

2. Leverage content, tools and connections

Pull platforms have a large added value when there is an imperfect, fragmented market, with lots of suppliers, many products that are difficult to compare, products that are distributed sub-optimally, a lot of detailed information on various locations, many who are interested in that information or products and asymmetry in information. That also explains the popularity of comparison sites for financial services and the large role given to search engines by consumers in the path to purchase. Successful pull initiatives put a specific set of content, tools and connections at the user’s disposal.

See also: 3 Keys to Selecting the Right Platform

Danone’s BLX

Danone developed a pull platform that supports mothers in all kinds of ways, from “becoming pregnant” to their child’s first five years, the “early nutrition” stage. Tom de Waard, global digital experience director at Danone Nutricia Early Life Nutrition: “The BLX platform supports mothers in all kinds of ways, from ‘becoming pregnant’ to their child’s first 1,000 days, the ‘early life nutrition’ stage that lays the foundation for future health. It includes being present in online places, owned, earned and paid, where mothers gather information and discuss matters with each other, a branded mobile app helping mothers 24/7 with relevant information and services. All these various data sources are used to provide tailor-made services to every parent with the right content, services and tools, and personal advice and offerings – precisely in sync with, for example, the exact age and health situation of the child. Months in advance of the birth, we are in frequent contact with the parents. That provides all kinds of possibilities to establish a connection. The result is that, from the birth on, our products are a natural given. The results of the platform are exceeding expectations by far on ‘brand of first choice’, NPS and the rate of interaction with the brand.”

3. Build Communities

A vast number of pull initiatives we looked at fulfill a community function or make use of it. Many offer consumers the opportunity to play an active role or to share all kinds of content. This way, they lend the authority of credible consumers. Think of the community that Danone is building. Connecting peers ensures that all involved gain value from the interactions. More users result in more interactions, which in turn results in more value. Creating such an upward spiral is the real challenge.

eToro

The vast majority of private bankers and investment advisers we know are performing worse than the market. That is a serious imperfection. At social investment network eToro, private investors can compare their portfolio with that of others. It is sort of the Facebook of private investors. You can see who has performed well for years in a row. eToro lets you invest along with the most successful investors. Your portfolio proportionally copies the trades of the Popular Investor of your choosing. When he buys, you buy. When he sells, you sell.

Yoni Assia, CEO of eToro, says, “64% of all trades via eToro are copy trades. Being followed and copied can be a lucrative business for our most popular traders. Our ‘Popular Investor Program’ allows traders to earn up to 2% of the assets they are passively managing.” eToro is one of the best examples we know of new conversations in financial services. Transparent information exchange is at the core of the business model. Trust in peers is leveraged and creates huge value for eToro members and eToro alike. eToro has more than 5 million registered users.

4. Think Beyond Customers

Users of Danone’s BLX platform don’t have to be a customer to have access to all the tools and services. That means it also attracts interested potential consumers who otherwise wouldn’t even show up on the radar. Financial institutions primarily think about services they can offer when someone already has been taken on as a customer. Most of the time, the number of non-customers is significantly larger. Why wouldn’t you develop services for this much larger target group? Other financial institutions foster this route, too.

Rabobank’s Hypotheekdossier 

Rabobank’s Hypotheekdossier, “mortgage file,” allows consumers, whether they are a customer or not, to do the math when they are looking for a new house or refinancing their mortgage. Because the information and tools are better than elsewhere, the platform has a large appeal and is an excellent lead generator.

Another example is Personal Capital, an American wealth manager that provides all kinds of tools to non-customers, letting them experience some of Personal Capital’s expertise.
In essence, these companies are using pull platforms to move upstream. They are building the brand in an active manner, among the target audience, branding by doing. On top of that, they get direct access to tomorrow’s customers, while being much less dependent on search engines and comparison sites.

5. Look Beyond Data

In all the pull platforms we have discussed so far, the use of data plays a pivotal role. Pull initiatives offer the possibility to gather much deeper consumer insights about what is going on in the consumer’s life around a particular life event or product. It is an important side effect of pull initiatives. They provide customer insights that can be translated into better products, or even real-time services.

Unilever’s All Things Hair

Unilever is the third-largest player in the global hair care market, but struggles to achieve growth. Consumers are tired of hair category clichés in advertising and go online in search of answers and inspiration. According to Google, there are around one billion (!) searches related to hair each month – from how to take care of split ends, to how to style your hair for a wedding. Half of all online beauty shoppers watch a related video on YouTube while looking for products to buy. But only 3% go to videos by beauty brands; vloggers control the other 97%. Facing these challenges, Unilever decided to launch All Things Hair, a YouTube channel where consumers can browse the latest trends, tips and treatments. What makes All Things Hair special is that it leverages partnerships with Google and a team of leading vloggers, many of whom have several million followers in their own right. Google’s data-mining capabilities allow Unilever to gain real-time insight in what people are looking for with regard to hair, such as insights in growing search terms and trending topics such as celeb’s hair or holiday seasons. It even helps Unilever to predict hair trends as much as three months in advance. These insights are used to brief a team of beauty vloggers, who are paid by Unilever to create bespoke tutorials. This content features relevant products from Unilever brands, such as Toni & Guy, Dove and VO5. All Things Hair became the No. 1 one hair care channel in just 10 weeks, with 50 million views in the first year – wedged between Rihanna and Nicki Minaj in YouTube’s engagement ranking.

6. Foster beyond the traditional vertical

Successful pull platforms dare to take on other roles. Danone is shifting from purely product to offering a broad array of services, as well. Alipay is choosing to have a different role in the value chain than the traditional role of a payment solutions provider; the company actively supports retailers to increase their revenues. If you want to solve the actual problems that customers face, then often there is more required than delivering a financial product. Successful pull initiatives dare to take on other roles. That not only fulfills the needs of customers better but also helps to open up new revenue streams.

TDC’s Get

The Get platform of Danish telco TDC comprises 12 services, from online newspapers and magazines, to pay-TV and Bet25.dk, online betting (35% of all Danes watch soccer via TDC). This way, TDC is developing its business model from subscriptions to a content play.

Ping An

China’s leading personal financial service provider Ping An adopted the strategy of the synergistic development of traditional and non-traditional businesses by creating all sorts of portals in non-traditional domains such as home, health NS car, but also food and entertainment. All these platforms have large numbers of users and interactions, and advanced data mining and precision marketing capabilities. Each and every one of them are new business lines that create new value for themselves, as well as for Ping An. Only when relevant and timely are Ping An’s traditional banking and insurance activities brought into contact with customers. The new business lines are not only increasing their own value; by moving upstream, they are increasing relevancy and enlarging the total customer base, and by allowing new synergies they also increase the value of the entire ecosystem of Ping An enterprises.

DIA Amsterdam 2018 will take place on May 16th and 17th  in the awesome Westergasfabriek venue, close to the vibrant city center.

7. Use network effects

Google finances online advertising purchases by merchants. Obviously, Google has a fair idea of the track record of the merchant, in terms of marketplace success – traffic, sales figures, customer reviews and satisfaction scores – as well as financial reliability and debtor risk. Amazon follows the same strategy as Google, providing loans to independent sellers on the Amazon platform. Everybody is expecting Apple to eventually use the vast pool of iTunes users, including their credit card data, for financial services.

Stored value

Both Google and Amazon can kick start such activities based on the millions of merchants they are already in contact with. That is their strength: they are capable of generating so-called network effects. Along the way, they have accumulated all kinds of assets; so-called stored value. Traffic figures, customer reviews and satisfaction scores are examples of such stored value. These accumulated assets are deployed later to develop new revenue streams with, if necessary, other business models. With every new service, the companies strengthen their position. Network effects can also be created by freeriding on the activity of established allied platforms. PayPal, for instance, grew on top of eBay.

There is currently much debate and speculation about how Amazon will enter the insurance market. Many fear that the company will launch a full-stack insurer, more or less similar to the ones we know. Looking at how Amazon leverages stored value to offer loans to merchants, it may in fact follow a totally different strategy. It may be interesting to look at all the stored value the company has and then think of what totally new insurance concepts would leverage this stored value to the max.

8. Create unconventional value

When financial institutions use pull initiatives to take on a different role in the value chain, we see that they not only strengthen their current business – for example by brand building or lead generation – but they also explore new revenue streams and business models. Ping An and TDC Get are explicitly doing so with various platforms.

See also: Insurtech: Where’s the Beef?  

PostFinance Card-Linked Offers

PostFinance (Switzerland) is partnering with Strands to provide transaction-driven marketing. The integration with Card-Linked Offers (CLO) enables the bank’s systems to analyze customer transactions, make contextual offers, recommend marketing strategies to merchants and continuously learn from customers’ responses. For example, businesses can reward loyal customers, gain competitors’ share of clients or re-activate customers that haven’t made a purchase for a while. Eligible customers receive the coupon on their mobile from the bank with a discount, which they accept or reject. The discount is redeemed automatically in the customer’s account; he just has to make the payment with the bank’s card. PostFinance charges a percentage of the revenue generated by the coupons, for instance 5%. So if a customer spends 3,000 CHF a year using the coupons, the bank gets 150 CHF in revenue from this customer. PostFinance has full control of the CLO platform, including multiple pricing options and monitoring capabilities.

Pull platforms are digital flagships

After mobile, social, and connected devices, pull platforms are offering a new interface with customers. Eduard de Wilde (director digital VODW) calls them examples of digital flagships, no less — comparable to the flagship stores of renowned retail chains at the best locations in the most important cities to show their brand and what it offers in full depth. The best practices that we included show that pull platforms can take so many different shapes. Some seem to be detached from the systems; others seem fully integrated. Some of them are using a specific medium; others use different media simultaneously, seamlessly matched to each other. But they also have a single point of departure in common. Real problem solving requires that financial institutions need to speak to their customers at the moments when customers need them most. Consequently, pull platforms need to be designed around the customer journey and building the two-way relationship, to enhance top-of-mind position, brand loyalty and advocacy.

The focus on problem solving also means it is about selling without selling. Self-serving content is out. The shift from push to pull is not just about shifting budget to pull platforms. How you reach customers is not the only thing that is important. It is what you do for them that counts even more. Consequently, brands need to adjust, from “how can we make sure people will buy more from us” to “how can we do more for them?” That is the way brands are built, and the way to become less dependent on search engines and comparison sites and escape the commodity trap.

If you would like to read more about pull platforms, check our book “Reinventing Customer Engagement. The next level of digital transformation for banks and insurers,” in English or in German

Obviously, we will ample attention to platforms at DIA Amsterdam, May 16 and 17.

Insurtech: The Year in Review

As we reach the end of 2017, the first full 12 months where insurtech has been recognized as a standalone investment segment, we wanted to reflect on what has been an incredible year.

From the start, we at Eos believed that insurtech would be driven globally, and that has certainly played out. This year, we’ve visited: Hong Kong, Amsterdam, New York, Las Vegas, Nigeria, Dubai, India, Singapore, Bermuda, Milan, St. Louis, Munich, Vienna, Paris, Zurich, Cologne, Chicago, San Francisco, Silicon Valley, Seattle and Toronto. We’ve expanded our geographic footprint to include the East and West coasts of the U.S. and India and have seen fantastic progress across our expanding portfolio. We’ve welcomed a number of new strategic partners, including Clickfox, ConVista and Dillon Kane Group, and launched our innovation center, EoSphere, with a focus on developing markets

At the start of the year, we published a series of articles looking at the key trends that we believed would influence insurtech and have incorporated these in our review of the year.

We hope you enjoy it! Comments, challenges and other perspectives, as always, would be greatly received.

2017: The year innovation became integral to the insurance sector

How are incumbents responding?

We are seeing a mixed response, but the direction of travel is hugely positive. A small number of top-tier players are embracing the opportunity and investing hundreds of millions, and many smaller incumbents with more modest budgets are opening up to innovation and driving an active agenda. The number sitting on the side lines, with a “wait and see” strategy is diminishing.

“If 2016 was the year when ‘some’ insurers started innovating, 2017 will be remembered as the year when ‘all’ insurers jumped on the bandwagon. And not a minute too soon! When I joined 3,800 insurance innovators in Las Vegas, we all realized that the industry is now moving forward at light speed, and the few remaining insurers who stay in the offline world risk falling behind.” Erik Abrahamson, CEO of Digital Fineprint

We are more convinced than ever that the insurance industry is at the start of an unprecedented period of change driven by technology that will result in a $1 trillion shift in value between those that embrace innovation and those that don’t.

Has anyone cracked the code yet? We don’t think so, but there are a small number of very impressive programs that will deliver huge benefits over the next two to three years to their organizations.

“We were pleased to see some of the hype surrounding insurtech die down in 2017. We’re now seeing a more considered reaction from (re)insurers. For example, there is less talk about the ‘Uber moment’ and more analysis of how technology can support execution of the corporate strategy. We have long argued that this is the right approach.” Chris Sandilands, partner at Oxbow Partners

Have insurers worked out how to work with startups? We think more work may be needed in this area….

See also: Insurtech: An Adventure or a Quest?  

The role of the tech giants

“Investors are scrambling for a piece of China’s largest online-only insurer… the hype could be explained by the ‘stars’ behind ZhongAn and its offering. Its major shareholders — Ping An Insurance (Group) Co., Alibaba Group Holding Ltd., Tencent Holdings Ltd.” – ChinaGoAbroad.com

“Tencent Establishes Insurance Platform WeSure Through WeChat and QQ” – YiCai Global

“Amazon is coming for the insurance industry — should we be worried?” – Insurance Business Magazine

“Aviva turns digital in Hong Kong with Tencent deal” – Financial Times

“Quarter of customers willing to trust Facebook for insurance” – Insurance Business Magazine

“Chinese Tech Giant Baidu Is Launching a $1 Billion Fund with China Life” – Fortune 

We are already well past the point of wondering whether tech giants like Google, Amazon, Facebook, Apple (GAFA) and Baidu, Alibaba, Tencent (BAT) are going to enter insurance. They are already here.

Notice the amount of activity being driven by the Chinese tech giants. Baidu, Alibaba and Tencent are transforming the market, and don’t expect them to stop at China.

The tech giants bring money, customer relationships, huge amounts of data and ability to interact with people at moments of truth and have distribution power that incumbents can only dream about. Is insurance a distraction to their core businesses? Perhaps — but they realize the potential in the assets that they have built. Regulatory complexity may drive a partnership approach, but we expect to see increasing levels of involvement from these players.

Role of developing markets

It’s been exciting to play an active role in the development of insurtech in developing markets. These markets are going to play a pivotal role in driving innovation in insurance and in many instances, will move ahead of more mature markets as a less constraining legacy environment allows companies to leapfrog to the most innovation solutions.

Importantly, new technologies will encourage financial inclusion and reduce under-insurance by lowering the cost of insurance, allowing more affordable coverage, extending distribution to reach those most at need (particularly through mobiles, where penetration rates are high) and launching tailored product solutions.

Interesting examples include unemployment insurance in Nigeria, policies for migrant workers in the Middle East, micro credit and health insurance in Kenya, a blockchain platform for markets in Asia and a mobile health platform in India.

Protection to prevention

At the heart of much of the technology-driven change and potential is the shift of insurance from a purely protection-based product to one that can help predict, mitigate or prevent negative events. This is possible with the ever-increasing amount of internal and external data being created and captured, but, more crucially, sophisticated artificial intelligence and machine learning tools that drive actionable insights from the data. In fact, insurers already own a vast amount of historical unstructured data, and we are seeing more companies unlocking value from this data through collaboration and partnerships with technology companies. Insurers are now starting to see data as a valuable asset.

The ability to understand specific risk characteristics in real time and monitor how they change over time rather than rely on historic and proxy information is now a reality in many areas, and this allows a proactive rather than reactive approach.

During 2017, we’ve been involved in this area in two very different product lines, life and health and marine insurance.

The convergence of life and health insurance and application of artificial intelligence combined with health tech and genomics is creating an opportunity to transform the life and health insurance market. We hope to see survival rates improving, tailored insurance solutions, an inclusion-based approach and reduced costs for insurers.

Marine insurance is also experiencing a shift due to technology

In the marine space, the ability to use available information from a multitude of sources to enhance underwriting, risk selection and pricing and drive active claims management practices is reshaping one of the oldest insurance lines. Concirrus, a U.K.-based startup, launched a marine analytics solution platform to spearhead this opportunity.

The emergence of the full stack digital insurer

Perhaps reflecting the challenges of working with incumbents, several companies have decided to launch a full-stack digital insurer.

We believe that this model can be successful if executed in the right way but remain convinced that a partnership-driven approach will generate the most impact in the sector in the short to medium term.

“A surprise for us has been the emergence of full-stack digital insurers. When Lemonade launched in 2016, the big story was that it had its own balance sheet. In 2017, we’ve seen a number of other digital insurers launch — Coya, One, Element, Ottonova in Germany, Alan in France, for example. Given the structure of U.K. distribution, we’re both surprised and not surprised that no full-stack digital insurers have launched in the U.K. (Gryphon appears to have branded itself a startup insurer, but we’ve not had confirmation of its business model).” – Chris Sandilands, partner, Oxbow Partners

Long term, what will a “full stack” insurer look like? We are already seeing players within the value chain striving to stay relevant, and startups challenging existing business models. Will the influence of tech giants and corporates in adjacent sectors change the insurance sector as we know it today?

Role of MGAs and intermediaries

Insurtech is threatening the role of the traditional broker in the value chain. Customers are able to connect directly, and the technology supports the gathering, analysis and exchange of high-quality information. Standard covers are increasingly data-driven, and the large reinsurers are taking advantage by going direct.

We expected to see disintermediation for simple covers, and this has started to happen. In addition, blockchain initiatives have been announced by companies like Maersk, Prudential and Allianz that will enable direct interaction between customers and insurers.

However, insurtech is not just bad news for brokers. In fact, we believe significant opportunities are being created by the emergence of technology and the associated volatility in the market place.

New risks, new products and new markets are being created, and the brokers are ideally placed to capitalize given their skills and capabilities. Furthermore, the rising rate environment represents an opportunity for leading brokers to demonstrate the value they can bring for more complex risks.

MGAs have always been a key part of the value chain, and we are now seeing the emergence of digital MGAs.

Digital MGAs are carving out new customer segments, channels and products. Traditional MGAs are digitizing their business models, while several new startups are testing new grounds. Four elements are coming together to create a perfect storm:

  1. Continuing excess underwriting capacity, especially in the P&C markets, is galvanizing reinsurers to test direct models. Direct distribution of personal lines covers in motor and household is already pervasive in many markets. A recent example is Sywfft direct Home MGA with partnerships with six brokers. Direct MGA models for commercial lines risks in aviation, marine, construction and energy are also being tested and taking root.
  2. Insurers and reinsurers are using balance sheet capital to provide back-stop to MGA startups. Startups like Laka are creating new models using excess of loss structures for personal lines products.
  3. Digital platforms are permitting MGAs to go direct to customers.
  4. New sources of data and machine learning are permitting MGAs to test new underwriting and claims capabilities and take on more balance sheet risk. Underwriting, and not distribution, is emerging as the core competency of MGAs.

Customer-driven approach

Three of the trends driving innovation that we highlighted at the start of the year centered on the customer and how technology will allow insurers to connect with customers at the “moment of truth”:

  • Insurance will be bought, sold, underwritten and serviced in fundamentally different ways.
  • External data and contextual information will become increasingly important.
  • Just-in-time, need- and exposure-based protection through mobile will be available.

Over time, we expect the traditional approach to be replaced with a customer-centric view that will drive convergence of traditional product lines and a breakdown of silo organization structures. We’ve been working with Clickfox on bringing journey sciences to insurance, and significant benefits are being realized by those insurers supporting this fundamental change in approach.

Interesting ideas that were launched or gained traction this year include Kasko, which provides insurance at point of sale; Cytora, which enables analysis of internal and external data both structured and unstructured to support underwriting; and Neosurance, providing insurance coverage through push notifications at time of need.

See also: Core Systems and Insurtech (Part 3)  

Partnerships and alliances critical for success

As discussed above, we believe partnerships and alliances will be key to driving success. Relying purely on internal capabilities will not be enough.

“The fascinating element for me to witness is the genuine surprise by insurance companies that tech firms are interested in ‘their’ market. The positive element for me is the evolving discovery of pockets of value that can be addressed and the initial engagement that is received from insurers. It’s still also a surprise that insurers measure progress in years, not quarters, months or weeks.” – Andrew Yeoman, CEO of Concirrus

We highlighted three key drivers at the start of the year:

  • Ability to dynamically innovate will become the most important competitive advantage.
  • Optionality and degrees of freedom will be key.
  • Economies of skill and digital capabilities will matter more than economies of scale.

The move toward partnership built on the use of open platforms and APIs seen in fintech is now prevalent in insurance.

“We are getting, through our partnerships, access to the latest technology, a deeper understanding of the end customers and a closer engagement with them, and this enables us to continue to be able to better design insurance products to meet the evolving needs and expectations of the public.” Munich Re Digital Partners

Where next?

Key trends to look out for in 2018

  • Established tech players in the insurance space becoming more active in acquiring or partnering with emerging solutions to augment their business models
  • Tech giants accelerating pace of innovation, with Chinese taking a particularly active role in AI applications
  • Acceleration of the trend from analogue to digital and digital to AI
  • Shift in focus to results rather than hype and to later-stage business models that can drive real impact
  • Valuation corrections with down rounds, consolidation and failures becoming more common as the sector matures
  • Continued growth of the digital MGA
  • Emergence of developing-market champions
  • Increasing focus on how innovation can be driven across all parts of the value chain and across product lines, including commercial lines
  • Insurers continuing to adapt their business models to improve their ability to partner effectively with startups — winners will start to emerge

“As we enter 2018, I think that we’ll see a compression of the value chain as the capital markets move ever closer to the risk itself and business models that syndicate the risk with the customer — active risk management is the new buzzword.” – Andrew Yeoman, CEO Concirrus

We’re excited to be at the heart of what will be an unprecedented period of change for the insurance industry.

A quick thank you to our partners and all those who have helped and supported us during 2017. We look forward to working and collaborating with you in 2018.

5 Challenges When Innovating With AI

Artificial intelligence is booming in insurance. In a recent report, Celent identified AI use cases around the globe and across the insurance value chain.

Uses include customer engagement (USAA’s Nina); product optimization (Celina Insurance Group, Protektr); marketing and sales (Usecover, Insurify, Optimal Global Health, Ping An); underwriting (ZestFinance, SynerScope, Intellect SEEC, Swiss Re); claims (Tractable, Ant Financial, Gaffey Healthcare); fraud detection (Ant Financial, USAA); risk management (Achemea); and business operations (Ping An Direct, Union Life).

Insurers are wise to innovate with AI technologies. Early adopters will face challenges but will also have the potential to reap greater rewards by improving efficiency and customer engagement.

Here are five challenges for carriers to consider when innovating with AI:

1. What technology to use when. When embarking on a digital transformation, there may be a number of solutions available for a given problem, one of which could be AI. But while AI may resolve an issue, it is important to examine all the potential solutions and decide which one is the best fit. Perhaps robotic process automation (RPA), application programming interface (API) or another automated solution is best suited. Can an existing technology be leveraged?

Deciding what solution to apply when requires you to look at the whole organization and all the issues upfront. This allows CIOs and CEOs to examine each problem, decide on the right technology solution and make sure it complements the overall strategy and budget.

See also: Strategist’s Guide to Artificial Intelligence  

2. Big data + AI = big strategy. A second challenge surrounds the management of big data obtained from customers, core systems, brokers/agents and insurance exchanges. Add to that the varied types of data that AI is managing, analyzing, communicating and learning from and things get a little more complicated. Here’s a list of the different data types AI may be working with:

  • Structured, semi-structured and unstructured data
  • Text
  • Voice
  • Video
  • Images
  • Sensors (IoT)
  • Augmented/virtual reality

Data is also classified as real-time, historical or third-party — yet another dimension to consider. Make sure your strategy takes the necessary data variables into account: where data will come from, where it will flow to and how it will be handled at various points in the customer journey.

3. Managing customers across swim lanes. This leads us to challenge No. 3: the ability of AI to engage with customer data at key touchpoints during the customer lifecycle. For example, if Lucy has group benefits as well as voluntary products, car and house insurance, how will her data be managed and optimized across swim lanes?

What will be the touch points for AI? When will other insurtech solutions be present? When is human intervention required? And how will this data be used to inform future risk decisions?

4. Harnessing AI’s multidisciplinary capabilities. AI encompasses machine learning, deep learning, natural-language processing, robotics and cognitive computing, to name a few. You can read my blog post here to learn more. Deciding what technical abilities will be required to solve your problem could present challenges as the lines between disciplines blur.

Additionally, the next wave of AI could come from entirely different industries, such as aerospace, environmental science or health — but  it will still have applications for insurance. The best way to overcome this is to examine your AI needs across solutions and select vendors with the right capabilities to execute them.

See also: The Insurer of the Future – Part 3  

5. Communicating past tech speak. As AI becomes mainstream, the challenge of helping non-technical business professionals understand these complex applications is real. AI systems can require a level of technical expertise beyond the everyday scope of business.

True digital transformation, regardless of technical complexity, affects everyone in the organization. Ensuring the vision is shared will matter as day to-day operations, tasks and activities change. Find someone who can break down the benefits of these new solutions into bite-sized pieces that everyone understands to ensure buy-in and ultimate success.

The question of whether AI will indeed disrupt the industry or simply enable its full digitization is still not known. It will not be the solution to every problem. However, if implemented strategically, it may hold the capacity to create an entirely new way of insuring — and delighting — customers in a rapidly changing landscape.