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  • user 5:49 pm on April 28, 2017 Permalink | Reply
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    Let’s do it…if you trust on InsurTech 

    I had shared my bold view on since a while and I’m currently doubling down on my beliefs

    It is not a secret that I’m an insurtech enthusiastic: I have shared my view about the need for any insurance player (insurer, reinsurer, distributors, etc.) to become an insurtech-player during the next several years. This will mean: organizations where will prevail as the key enabler for the achievement of the strategic goals.

    It was only 12 months ago when I published my four Ps to assess the potential of each insurtech initiative. My approach is based on four axes related to the fundamentals of the insurance business:

    1.      Productivity: Impact on client acquisition, cross-selling or additional fee collection for services;

    2.      Proximity: What an insurtech approach can do to enlarge the relationship frequency, by creating numerous touch-points during the customer journey — a proven way to increase the customer’s satisfaction;

    3.      Profitability: What can be done to improve the loss ratio or cut costs without an increase in volumes;

    4.      Persistence: Increasing the renewal rate, and, thus, stabilizing the insurance portfolio.

    InsurTech will make the insurance sector stronger so more able to protect people [ Click to Tweet]

    The insurtech ecosystem has shown terrific growth in the last 20 months, after many VCs complained about the absence of insurtech startups. The updated Venture Scanner’s map shows more than 1,000 initiatives, with more than $17.5 billion invested. The needs for a pragmatic approach, the ability to prioritize the initiatives and a stronger focus on innovation have become more and more relevant.

    I strongly believe in the effectiveness of the aforementioned four axes to evaluate a business. In the last few months, I followed this view to make and career choices.

    At the beginning of the year, I invested in Neosurance, an insurtech currently accelerated by Plug & Play in Silicon Valley, and I’m supporting the company as a strategic adviser. This company developed a platform to enable incumbents to sell the right product with the right message at the right time to the right person. By using artificial intelligence, Neosurance aims to become a virtual insurance agent with the ability to learn and improve how it sells. I fell in love with its model because of its productivity angle, the first of the four Ps.

    Let’s consider all the non-compulsory insurance coverages. The large part of the purchases have been — and still are — centered on a salesman’s ability to stimulate awareness and to show a solution. In a world that is getting increasingly more digital and is becoming less about human interaction, I’m skeptical about the ability to cover the people’s risks with the current approaches of online distribution, comparison websites and on-demand apps. All three of these approaches require a rational act and a lot of attention. But many customers look like more to Homer Simpson than to Mr. Spock.

    Those are the reasons I’m optimistic about Neosurance’s business model. On one hand, its B2B2C model aims to be present where and when it matters most for the customer. And, its “push” approach is able to preserve underwriting discipline, which is the only way to continue in the middle term and distribute a product that keeps a promise to the customers. My investment choice was based on the business model evaluation, the company’s pipeline and the quality of its team. I hope to be able to make more investments.

    I also decided it was time for a job change at the end of 2016. After 11 years, I left my career with Bain & Company, where I advised the main insurers and reinsurers on the European market. I had focused my activity on the single insurtech trend I’m passionate about: connected insurance. In the last several years, I have advised more than 50 players on this topic — from insurers to reinsurers and from service providers to investors. I consider the use of sensors for collecting data on the state of an insurable risk and the use of telematics for remote management of the data collected to be a new insurance paradigm. For years, many of the use cases we have seen globally have only somewhat used the potential of this technology to support an insurer and achieve his or her strategic goals.

    My belief could be well understood by observing the best practices of auto insurance telematics and their performance regarding the other three Ps:

    • Let’s start with the proximity angle. Insurers have provided telematics-based services that have reinvented a driver’s journey. More and more players are focusing on this opportunity to create an ecosystem of partners to deliver their suite of services. Discovery Insure is one of the best at doing this because it is able to reward clients with a free coffee or smoothie for each 100 kilometers they drive without speeding or braking hard. Is there a way for you to be closer to your client?
    • The Italian market shows the potential benefits in terms of persistency. There are more than 6.5 million cars with a device connected to an insurance provider in Italy, and the telematics penetration reached 19% in the last three months of 2016. On average, the churn rate on the insurance telematics portfolio is just 11%, which is lower than the 14% churn rate on the non-telematics portfolio.
    • Last — but definitely not least — is the profitability side. The Italian telematics portfolio shows a claims frequency that, risk-adjusted, was 20% lower in comparison with the non-telematics portfolio, as I mentioned in a paper last year. The best practices were able to achieve an additional 7% average claims cost reduction by acting as soon as a claim happened and by reconstructing the claims dynamic. These savings let insurers provide an up-front discount to the clients. This makes the product attractive and achieves higher profitability.

    My day job is now to run an international think tank focused on connected insurance. More than 25 companies have joined the European chapter since the beginning of the year, and eight players have joined the North American chapter since March. This initiative is developing the most specialized knowledge on insurance IoT, which is based on a multi-client research. I personally deliver the contents through one-to-one workshops dedicated to each member. Throughout the rest of the year, I will host plenary meetings with all the players to discuss this innovation opportunity.

    I felt honored and privileged last spring when former Iowa insurance commissioner Nick Gerhart invited me to present my 4 Ps at the Global Insurance Symposium 2017 in Des Moines, but I did not realize how this framework would so deeply influence my life decisions.

    It is definitely an interesting time to be in the insurance sector.

    [linkedinbadge URL=”https://www.linkedin.com/in/matteocarbone” connections=”off” mode=”icon” liname=”Matteo Carbone”]  is Insurtech Thought Leader, Keynote speaker and writer on insurance innovation

  • user 7:36 pm on November 16, 2016 Permalink | Reply
    Tags: , digital transformation, future of insurance, , matteo carbone,   

    The future of insurance is Insurtech 


    The insurance sector has entered a phase of profound transformation. Numerous startups—around 1,000 according to Venture Scanner map—have popped up to challenge the traditional model by generating more than 16 billion dollars in the last year from insurance companies.

    I believe that we will see a completely changed insurance sector in the medium term. But I consider it a joke for an industry conference to show a picture of a newborn and sell it as the last intermediary or the last client to have purchased an insurance policy. I’m convinced that insurance companies will still be relevant in the future, or will become even more relevant than they are now, but these companies will have to be insurtechs, or players who use as the main enablers for reaching their own strategic objectives.

    The reach of this goes way beyond the elimination of “the middle man” and interpretations from a distribution point of view. The direct digital channel dominates very few markets and deals only with compulsory insurance. Whereas in the vast majority of markets, a multichannel oriented customer continues—with variations from country to country—to choose at least at some point of the customer journey to interact with an intermediary. The amplitude of the digital transformation happening in the insurance industry is widespread and encompasses all of the phases of the insurance value chain, from underwriting to claims.

    Any insurance will be InsurTech

    Every insurance sector player—whether it’s a reinsurer, a carrier or an intermediary—ought to pose this question: How should the insurance value chain be reshaped by using the new technologies at hand? There are numerous relevant technologies that come to mind, including: the cloud, the Internet of Things (IoT), big data and advanced analytics, quantum computing, artificial intelligence, autonomous agents, drones, , virtual reality, self-driving cars.


    In order to take full advantage of these technologies, there has to be a structured approach that begins with identifying use cases that can have an actual contribution to reaching strategic business goals, then takes these use cases and applies them in such a way to maximize the effects inside the insurance value chain of each player. Finally, it should look at the software/hardware selection or the “make vs. buy” choices. The essential idea is that there is no such thing as “one size fits all.” Each player needs to create customized use cases based on their individual strategy and characteristics.

    To date there are several types of approaches to mapping insurtech initiatives. I have developed my own classification framework based on six macro areas (Awareness, Choice, Purchase, Usage, IoT and peer-to-peer (P2P)). Insurance IoT, also known as connected insurance, represents one of the most relevant and mature insurtech trends.

    Connected Insurance represents a new paradigm for the insurance business, an approach that fits with the mainstream Gen C, where “C” means connectivity. This novel insurance approach is based on the use of sensors that collect and send data related to the status of an insured risk and on data usage along the insurance value chain. During the first edition of the Connected Insurance Observatory since January 2016, participants had the opportunity to learn what the results in the auto sector are and about some of the first uses of this approach in the other business lines.


    Connected insurance: the insurance policy for the Gen C


    Auto telematics represents the most mature insurtech use case, as it has already passed the test and experimentation phase within the innovation unit. It is currently being used an instrument for daily work within motor insurance business units. In this domain, Italy is an international best practice example: Here you can find at the end of 2015 half of the 10 million connected cars in the world have a telematics insurance policy. According to the SSI’s survey for the Connected Insurance Observatory, more than 70% of Italians show a positive attitude toward motor telematics insurance solutions.  According to the Istituto per la Vigilanza sulle Assicurazioni (IVASS), about 26 different insurance companies present in Italy are selling the product, with a 16% penetration rate out of all privately owned insured automobiles in the second quarter of 2016. Based on information presented by the Connected Insurance Observatory — a think-tank I created in partnership with Ania that brings together more than 30 European insurer and re-insurer groups — the Italian market will surpass 6 million telematics policies by the end of the year.


    Based on this data, we can identified three main benefits connected insurance provides to the insurance sector:

    1. Frequency of interaction, enhancing proximity and interaction frequency with the customer while creating new customer experiences and offering additional services
    2. Bolstering the bottom line, improving insurance profit and loss through specialization,
    3. Knowledge creation and consolidating knowledge about the risks and the customer base


    The insurance companies that are part of the Observatory are adopting this new connected insurance paradigm for other insurance personal lines. The sum of insurance approaches based on IoT represents an extraordinary opportunity for getting the insurance sector to connect with its clients and their risks. The insurers can gradually assume a new and proactive role when dealing with their clients—from liquidation to prevention.

    It’s possible to envision an adoption track of this innovation by the other business lines that are very similar to that of auto telematics, which would include:

    • An initial incubation phase when the first pilots are being put into action in order to identify use cases that are coherent with business goals;
    • A second exploratory phase that will see the first rollout by the pioneering insurance companies alongside a progressive expansion of the testing to include other players with a “me, too” approach;
    • A learning phase in which the approach is adopted by many insurers (with low penetration on volumes) but some players start to fully achieve the potential by using a customized approach and pushing the product commercially (increasing penetration on volumes);
    • Finally, the growth phase, where the solution is already diffused and all players give it a major commercial push.

    After having passed through all the previous steps in a period spanning almost 15 years, the Italian auto telematics market is currently entering this growth phase. The telematics experience teaches us three key lessons regarding the insurance sector:

    • Transformation does not happen overnight. Telematics—before becoming a relevant and pervasive phenomenon within the strategy of some of the big Italian companies—needed years of experimentation, followed by a “me, too” approach from competitors and several different use cases to reach the current status of adoption growth.
    • The companies can be protagonists of this transformation. By adding services based on black box data, telematics has allowed for improvements in the insurance value chain. Recent international studies show how this trend of insurance policies integrated with service platforms is being requested by clients. It also shows that companies, thanks to their trustworthy images, are considered credible entities in the eyes of the clients and, thus, valid to players who can provide these services.
    • If insurance companies do not take advantage of this opportunity, some other player will. For example, Metromile is an insurtech startup and a digital distributor that has created a telematics auto insurance policy with an insurance company that played the role of underwriter. After having gathered nearly $200 million dollars in funding, Metromile is now buying Mosaic Insurance and is officially the first insurtech startup to buy a traditional insurance company. This supports to the forecast about “software is eating the world”— even in the insurance sector.

    [linkedinbadge URL=”https://www.linkedin.com/in/matteocarbone” connections=”off” mode=”icon” liname=”“] is Principal at Bain & Company

  • user 11:35 pm on October 28, 2016 Permalink | Reply
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    INSURTECH – You will never insure – or be insured – the same again! 

    In the startup world, is currently one of the most dynamic and exciting sectors: more than $2,6bn were invested in the industry last year, three times the amount invested the year prior. Corporate insurers such as Axa, Allianz, AIG or Aviva are creating in-house funds to identify the most promising innovation in the field. The landscape is fast evolving, with the shared economy practices turning the industry upside down: thus, unicorns like Blablacar or Airbnb push traditional actors to develop new insurance models that go beyond transportation and housing, and draw from IoT, big data, or gamification to transform the insurance industry overall.

    An entire book would not be enough to capture all insurtech innovations, so let’s focus on three transforming trends in the industry and their impact on traditional insurers.

    Don’t speak about insurtech, speak about insurtechS!

    Traditional insurance used to be applied to a few sectors, with a few bundle products, but times have changed! The industry is now facing several levels of segmentations:

    • first, a segmentation in model, with an increased separation between product ownership and product consumption as a result of the shared economy. You no longer use a car that is yours but one you have borrowed to someone – so who should pays the insurance?;
    • second, a segmentation in application, with insurtech going beyond the traditional insurance products applied to transportation or housing, to now comprise new wearables or peer-to-peer practices;
    • third, a segmentation in , with insurtech start-ups choosing specific verticals such as data analytics, claim acceleration tools or customer engagement to support more traditional insurance activities.

    These segmentations mean traditional insurance actors are faced with new challenges to respond to new consumptions habits, as well as new business opportunities, for instance responding to specific needs.

    Mastering personalised insurance

    Not only have consumers changed their habits, but they are also increasingly asking for personalized services: less and less people are willing to pay bundles, and would rather get personalized coverage. Whilst before, insurers relied on market trends to develop new insurance products, they now need to be more lean and creative in their packages.

    Failure to satisfy increasingly demanding and selective consumers would result in losing clients, but traditional actors have in fact been very good at embracing insurance curation: they are making the most of new health tracking devices to provide premiums to fit customers, or offering discounted auto insurance for customers using telematics devices to track safe driving. All-in-one policies are also starting to emerge, thanks to highly personalised digital risk assessment.

    For corporate insurers, insurtech is a way to climb the food chain

    The emphasis put by traditional insurers on insurtech is easily justified: from data analytics and lifestyle apps allowing client service personalisation, to hardware supporting preventive action rather than corrective ones (to detect fire for instance), the added-value of insurtech is immense. Information security systems or digital processing are further revolutionizing customer service, making insurance/client relations more seamless.

    Insurtech ultimately gives incumbents the opportunity to get directly exposed to the client rather than go through intermediary brokers, making coverage more affordable for consumers and more profitable for the providers. As such, corporate actors and insurtech startups should not see each other as competitors, but rather as complementary actors. In fact, no insurtech today is directly challenging an insurance company like Monzo or Starling Bank do with traditional , and for insurtech, the path to customer acquisition is more so than not likely to go past corporate insurers.

    Increased synergies between insurtech and corporate insurers are likely to be beneficial to both parties. Other than the traditional challenges related to regulation and barrier to entry, the main test for insurtech and insurance companies will come from the consumers’ reaction: if the personalisation of services can be beneficial operationally, it also comes at high cost, that of privacy. Traditional insurers and insurtech companies will therefore have to work together to guarantee that their customers’ data is collected and managed in a secure and safe way. And for that cybersecurity startups may have some answers.

    [linkedinbadge URL=”https://www.linkedin.com/in/antoine-baschiera-85aa033a” connections=”off” mode=”icon” liname=”Antoine Baschiera”] is CEO at Early Metrics

  • user 11:36 pm on October 8, 2016 Permalink | Reply
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    LASIC InsurTech: The Beginning of Alternative Insurance! 

    Many of the successful companies started as social enterprises in emerging markets and scaled successfully to be a unicorn. Notable examples are Ant Financial in and M-PESA in Keyna. Alipay of Ant Financial and M-PESA both exhibit the LASIC (Lee and Teo, 2015) characteristics. Alipay has more than 800m users globally with more than 300m Chinese mobile users and M-PESA accounts is 4 times more than all the traditional bank accounts in aggregate in Kenya. LASIC startups are those with low profit margin business, asset light balance sheet, scalable business, innovative and operate in a compliance light regime. Ant Financial and M-PESA have all the LASIC characteristics.

    When it comes to in China, Zhong An will rank the highest in terms of innovation and valuation given its association with Alipay as a digital (online and mobile) micro insurance provider (Fintech News, 2016). It is not surprising that Zhong An exhibits the LASIC characteristics too. But a new class of LASIC model may be emerging in China. These new insurtech business models originated from the concept of Mutual Aid and started operation in the last two years. In organization theory, the term mutual aid is used to describe a voluntary reciprocal exchange of services and resources for mutual benefits. In America, the fraternity societies existed during the Great Depression providing their members with insurance and benefits for health, life and funeral. In the 1930’s, the English “workers clubs” also provided health insurance. But as early as 18th and 19th centuries, forms of mutual aid oragnisations such as the Friendly Societies and medieval craft guilds provided their members with insurance, funeral expenses, pensions, care for sickness, and even dowries for poor girls. The intellectual abstraction has its roots in mutualism, labour insurance system, trade unions, cooperatives and other civil society movements.

    Typically, mutual aid is a term used to describe a structure or organisation that everyone is free to join and free to participate. The participants in mutual aids groups and all their activities are voluntary. It emphasizes the open and voluntary cooperation as opposed to induced cooperation (Kropotkin, 2008). The idea of mutual aid flourishes in entities that support participatory, democracy, equality of member status and decentralization of decision making at the structure level. Status of the group is determined or conferred mainly by participation. External societal status is irrelevant within the group.

    On the internet, Mutual Aid Platform is seen as a mutual financial assistance and risk sharing platform. It is a class of platforms that members can lower their aid threshold and raise their aid limitation through mutual financial assistance and risk sharing. Members can join a mutual assistance plan with an advance deposit of only RMB10. As a member, one may apply for an aid of up to a maximum of RMB300,000. The maximum deduction from the member’s account for each application is RMB3. The more members there are, the lower the contribution. When there is zero balance in the member’s account,  there will be a call for payments. If the member’s account keeps zero balance more than 30 days, he/she will quit the plan automatically. It is estimated that the yearly contribution is between RMB60-90. When there is an application for RMB300,000 as mutual aid amount and if there are 1m participants, each user contributes only RMB0.30 (PR Newswire, 2016).

    The largest mutual aid platforms are listed below.

    1. Zhongtuobang,众托帮
    2. Shuidihuzhu,水滴互助
    3. Quarker,夸克联盟
    4. eHuzhu,e互助
    5. Kangaikongshe,抗癌公社
    6. 17Huzhu,17互助
    7. Bihuhuzhu,壁虎互助
    8. Tongxinhuzhu,同心互助
    9. Mayihubao,蚂蚁互保

    10. Banmashe,斑马社

    Started in July 2016 with a platform, Shanghai based with RMB100m registered capital Zhongtuobang (ZTB) has reached two million users as at 1 Oct 2016 and it is the first mutual aid company to have a double A rating from the Chinese Internet Association iTrust. On August 19, Shuidihuzhu was the largest with over a million users before being taken over by Zhongtuobang in the second half of 2016. The growth in this sector is exponential. The founders of these platforms have insurance experience and bridge the gap in serving the underserved.

    ZTB main business is in medical mutual aid and lower the barrier entry for micro enterprises and farmers that are deterred from buying insurance of high entry premiums. It is a form of insurance inclusion scheme where the risk is pooled with low contribution. Zhongtuobang has launched multiple mutual aid products including Anti-Cancer & Disease, Travel Accident, Dad & Mom Mutual Aid, Women’s Health and a Students Comprehensive Plan. According to ZTB, the average age of members is 31 and 27 for male and female respectively. To cater to those who are above 55 and not eligible for traditional insurance, ZTB rolled out mutual aid product for those between 51-65 years old. They have launched products specifically designed for medical care personnel and diabetes sufferers. There are plans to launch smart contract insurance products using the Blockchain technology. Blockchain with analytics also has certain features that will minimize false claims and frauds because the data are transparent and permanent. The total investment by Venture Capital into Beijing based Shuidihuzhu is RMB55m by IDG, Tencent, and others. They have launched four programs so far.

    There are two Blockchain use cases that we know of in the mutual aid industry in China, ZTB and Tongxinhuzhu. Tonxinhuzhu blockchain (https://www.tongxinclub.com/pc/blockchain/index) has 124,858 members, 90 nodes and around 971,533H/s, equivalent to computing power of 4 MacBook Pro and 2.7GHz Intel Core i5 8G storage. There are 537345 blocks as at 4 Oct 2016. Both cases are using Blockchain for identification and verification purposes for the members.

    The advantage of this Blockchain application is that historical information can be obtained for every account at low cost. Given that the information is permanent and public (it prevents the service provider from changing the records), it solves the issues of trust in a mutual aid platform. It is easy to match, execute, monitor with the potential use of smart contracts at low cost as compared to a centralized system. At present, claims are not verified or executed by smart contracts and Blockchain is only utilised to address the issue of trust in the mutual aid industry.

    This ZTB use case has demonstrated that mutual aid is scalable by solving the issue of trust among potential subscribers who are strangers to each other. This is scalable to 1.3b population from all over China with potential use of smart contracts. Insurance inclusion is achievable for specialised risk pooling in areas of insatiated demand, especially in rural areas and critical illnesses. With big data, such risk will be better understood and allowing for mass adoption and efficient pricing of insurance services. Network effect of risk sharing will enable mutual aid platforms to scale across a large number of members.

    Are these new Mutual Aid business models a form of LASIC InsurTech? This class of business model has low profits margin with no requirement of heavy investment in assets. It has been scaling as seen in the last few months with the help of low premium. Some of them are using Internet with Blockchain as an innovative technology to lower cost and increase trust. There are hardly any compliance rules at this moment for the industry. It remains to see if the use of new technology can detect and reduce fraudulent claims and whether the industry can increase its scope of services to a larger base of sticky customers. Ant Financial has only 1 fraud in 100,000 transactions and like M-PESA, offers services beyond payments of daily purchases and utilities. Users can buy insurance, funds, tickets, movie bonds, obtain loans, and even get a credit rating. The latest innovation Alipay Everywhere is to purchase household services such as cooking and caregiving from neighbours for a fee (Horwitz, 2006 and Jain, 2006). These are all made possible because of data analytic, location services and mobile technology. Big data, smart contract and artificial intelligence risk analytic remains an area that the mutual aid InsurTech industry need to take advantage of. There are LASIC unicorns such as Ant Financial to emulate and if the industry can harness the right technology to serve the masses, mutual aid startups such as Zhongtuobang will become the new unicorns.


    Biznews, “Mutual Aid Rising in China”, Sep 2016,http://www.biznews.in/article/mutual-aid-rising-in-china

    Fintech News, “Top50 Fintechs in China”, Sep 2016,http://fintechnews.sg/5639/fintech/top-50-fintechs-china-kpmg/

    Horowitz, Josh, “With Alipay, China’s Most Popular Payments App, You Can Now Ask Total Strangers To Do Anything For A Fee”, Sep 2016, http://qz.com/795732/alipay-everywhere-from-alibaba-and-ant-financial-lets-you-ask-total-strangers-to-do-anything-for-a-fee/

    Huzhuzhijia, “互助之家”,http://www.huzhuzj.com/

    Jain, Aman, “New Alibaba App Allows You To Ask Strangers Do Anything For A Fee”, Sep 2006, Valuewalk, http://www.valuewalk.com/2016/09/alibaba-app-strangers-anything-fee/

    Kropotkin, Peter, “Mutual aid: A Factor of Evolution”, 2008, Forgotten Books, Charleston, SC.

    Lee, David Kuo Chuen and Ernie Teo, “Emergence of Fintech and the LASIC Principles”, Journal of Financial Perspective, 2015, Vol 3, 3.

    PR Newswire, “Mutual Aid Rising in China: Inclusive Aid Catches Up With New Opportunities After the G20 Summit”, Sep 2016, http://en.prnasia.com/story/159264-0.shtml


    Appreciation to Ge Long, Co-founder, Eric Yu, CTO of Zhongtuobang and James Gong of Chainb.com.

    About David LEE Kuo Chuen

    David LEE Kuo Chuen, PhD(LSE), Professor (UniSIM), 2015 Fulbright Scholar (Stanford University), is an investor in Blockchain companies and . He is also the founder of Dlee Capital Management and various other companies. His award winning book “Digital Currency” was voted as outstanding by the American Library Association. His business and operating experience includes manufacturing, finance, hospitality, real estate, consultancy with 20 years in alternative finance. He is nominated by Internal Consulting Group as the Global Thought Leader for Fintech and Blockchain.by Internal Consulting Group as the Global Thought Leader for Fintech and Blockchain. He is contactable at [email protected].

  • user 7:35 am on September 29, 2016 Permalink | Reply
    Tags: connected insurance, ,   

    Connected insurance is here to stay—are you ready for this new insurance paradigm? 


    Italians want policies; they are not afraid of “Big Brother.” According to the Ania-Bain Observatory, can take off in the home and health sectors. Now is the time for both the model and management of connected insurance to be structured.

    As of today, 22% of Italian households that have no home insurance are inclined to buy it—if it were connected insurance. This was the starting point of July’s meeting of the Connected Insurance Observatory, an Ania–Bain think-tank, which has put together executives from 30 insurance groups within the Internet of Things (IoT) sector to discuss the great potential of connected insurance, as well as the challenges it poses to the insurance business.

    Among those challenges is the protection of auto insurance telematics data, a topic that the Data Protection Authority has recently tackled, promising to offer clients appropriate visibility into the usage of collected data.

    “There has been an explicit acceptance of the validity of a try-before-you-buy application in auto insurance from the Italian regulator,” says Matteo Carbone, principal at Bain & Company and founder of the Observatory. Regulatory acceptance of the validity of this principle has proved that there are no real obstacles to innovation in this area—except when it comes to the rights of the insured, which have to be respected. (Of course, this includes the provision of a detailed explanation to insurance customers of the business purpose for which the data is being collected.) Carbone continues, “In Italy, if there is the will, innovation can be achieved just as easily as in Silicon Valley.”


    A new model

    On one hand, InsurTech and connected insurance are transforming insurance business lines. On the other, it is essential to create the conditions needed for insurers and other specialized players to fulfill their role as providers, each in its own sector: from e-health to antifraud and from driverless cars to electronic payments and product design. “A new and more connected insurance model has to be defined In order to achieve this, so that the full potential of the can be exploited,” says Luigi Di Falco, Head of Life and Welfare, Ania. “In our opinion, there are many opportunities and areas to be explored within connected insurance that would allow for a more client-centric offering to be created. The demand would be easier to aggregate, and thus more client categories that are not insurable today would become insurable. Last, it reduces claims through the use of sensors with advantages for both the insurer and the insured.”


    Managing an ecosystem

    There are still plenty of challenges. Chief among them, according to Ania, are the evolution of rules and regulations on privacy, the risk of data monopoly from players like Google, the arrival of new insurance start-up competitors and the danger of insurance disintermediation. Di Falco warns that “the Observatory has to look at understanding both the advantages and the dangers that come with InsurTech.”

    At the foundation of everything is the synergy between numerous partners that drives insurance toward becoming the coordinator of a highly complex system. According to Carbone, “Insurers today are aware that using external providers is simply not enough and that the orchestration of the whole ecosystem needs to happen. This is a relatively new trend that represents the next frontier of connected insurance and is essential for reaching full potential.”


    Regarding privacy issues, the accepted principle states that if the client wants additional services, he or she needs to enable the insurer to provide them. According to research conducted by the Observatory on the propensity of customers to buy home insurance policies, which include intelligent devices installed at home, there are positive signals: Clients that do not have home insurance show more interest in buying a connectedpolicy. As Di Falco confirms, “If the insured believes that a service is useful, he or she will be ready to renounce the privacy of his or her data. But this has to be reflected by a legal framework that specifies that the loss of privacy is strictly connected to perceived benefits on behalf of the client.”


    Innovation are moving to the home and health sectors

    Being aware of this, 76% of the insurance carriers participating at the Observatory expect to see significant innovation activity related to home products (the “connected home”) in the next 12 months. Also, 43% of companies believe the health sector—(“connected health”)— will be ripe for innovation, whereas in the life and industrial sectors, the potential for innovation is expected only in the medium term. Di Falco says that people are more likely to buy insurance for the home. But this is not the only sector experiencing innovation: Some specialized insurance companies are already offering health insurance coverage related to wearables, claim detection and sideline services, starting with health monitoring, second opinions and medical consultation via chat and continuing with access to networks of healthcare structures and drug stores. Di Falco underscores the point: “In a country where the proportion of people over 65 will grow to become a third of the entire population, it is important to develop forms of insurance protection in rehabilitation and long-term assistance where the state is less present and the nuclear family is not holding together as it once did.”


    The Connected Insurance Observatory was created with the purpose synthesizingItalian excellence in the connected insurance sector. It has three main goals: first, to rationalize existing industry knowledge and experience; second, to identify together with the companies what needs to be improved, what the main challenges and critical points are, and what the main ambitions are; and third, to promote a culture of innovation in the insurance sector by encouraging dialogue between all players involved. “To sum it up,” says Carbone, “we have created a think-tank centered on the insurance sector that boasts the participation of more than 15 other players—including the Italian Association of Insurance Brokers (AIBA)—coming from different backgrounds that are interested in sharing their own experiences with the insurance carriers.”


    Intermediaries’ interest on the rise

    Forty percent of Italian brokers believe that connected insurance represents an interesting business opportunity in the medium term. A recent survey developed by AIBA and the Connected Insurance Observatory shows that, other than the growing interest of intermediaries in connected solutions, larger brokers are more likely to see the business opportunity within connected insurance: 67% of big brokers expressed this, compared to 60% of medium-size brokers and 40% of small brokers.

    (The original version of this interview initially appeared in Insurance Review.) 


    Matteo is Principal in Bain & Company’s Financial Services and Digital Practices, Founder and Responsible of the Connected Insurance Observatory, Thought Leader in InsurTech, Top 50 InsurTech Influencer.

  • user 11:49 am on July 29, 2016 Permalink | Reply
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    Insurers are the new kids on the blockchain: Everledger, Guardtime and CGSC discuss why 


    Ensuring cyber security, providing automated services and improving overall customer engagement are all increasing concerns in the dynamic world of that is changing with the advent of sensory devices and connected services.

    however could be the saving grace to unlocking all of these issues. So, where are insurers at in adopting this and what are the benefits?

    To put a spotlight on blockchain in insurance, Insurance Nexus conducted exclusive interviews with Everledger, Guardtime and CGSC and created an exclusive white paper, you can access the document right here.

    Read the white paper to gain a clearer perspective on how blockchain in insurance can help you to:

    • Improve security and privacy: customer confidentiality and security concerns act as a barrier to insurers, get to grips with the way blockchain circumvent the challenges of security and privacy
    • Drive better customer engagement: for years, insurance has been regarded with little trust by customers, discover how blockchain opens the doors to innovative engagement tools in insurance
    • Implement automated services: lengthy policy approvals and claims authorizations act as a deterrent to customers and are operationally inefficient, learn how blockchain can support fast and efficient automated services

    I hope that you enjoy the read and please let me know if you have any questions.

    Kind Regards,


    [linkedinbadge URL=”https://www.linkedin.com/in/marshairving” connections=”off” mode=”icon” liname=”Marsha Irving”]  is Head of Innovation, Insurance Nexus and this post was originally published on linkedin.

  • user 4:40 pm on July 25, 2016 Permalink | Reply
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    Is Innovation in Insurance Happening Right Now? 


    occupies a sector of our economy that has not seen any major tech disruptions until recently. Its history goes back to the Lloyd’s of London in the 1600s, who mitigated their risk exposure by posting notices of their cargo headed for the New World. The cargo would ship out only when enough merchants signed up to undertake the travel risk. The risk-takers eventually came to be known as underwriters and the bonuses they received for undertaking that risk were called premiums.

    With a space so antiquated and full of consumer trust issues, why has nothing changed? Well, 66% of consumers have distrust for the insurance industry. 70% of consumers feel that choosing financial products are confusing [1]. The distribution model is outdated; insurance agents are still making house calls. Market conditions create an interesting opportunity for startups vying for a seat at the table. There is a need for newer distribution models, a simplification of consumer products, and a shift in a mindset among customers.

    Also, today’s household decision makers are becoming harder to sell to. A 2015 LIMRA study found that the majority of Gen X and Y consumers know they are under-insured, but less than 20%said they are likely to buy life insurance [2]. Millennials also have a strong opinion about current insurance policies. Bob Mozeika, head of Munich Re’s Executive Strategy, stated at the Plug and Play Insurance kick-off event that “Millennial’s really want more transparency in their products… people want to fully and easily understand their coverages and value they are receiving, Not just easy access” [3].

    There are many barriers to entry for new innovative insurance companies. For one, insurance companies have been slow to adopt innovation. They are also making expensive acquisitions with Price to Book Values falling between 10x to 16x. [4] Large insurers have had difficulty implementing IT system integrations. Many are still relying on old legacy infrastructure. With current regulation stifling advances in peer-to-peer insurance there are still many significant barriers to entry for startups to get off the ground.

    The market is already starting to make way for . In the past six years, early stage ‘insurtech’ funding has grown from less than $50 million to close to $350 million [5]. The new inflow of cash mimics the trends in the space.

    New ‘insurtech’ companies are leveraging the power of shared economy made popular through services like Uber and Airbnb. On top of that, there are now more effective communication platforms to reach customer segments. The Internet of Things and ‘Big Data’ have given unprecedented insights into customer habits in real time. New tech such as autonomous driving will also significantly change the future of auto insurance [6]. These tools will allow the insurance sector to move from a reactive model, to a proactive one – a revolutionary turn.

    We are starting to see mobile and in-app solutions develop in this market space. A number of high caliber startups are beginning to deliver innovation especially in the on-demand insurance space. Trov offers a mobile app that tracks, prices, and delivers insurance coverage for single items and possessions. Early this year, they raised $25 million. [7] Slice offers on-demand insurance to the ride sharing economy on the drivers side. They just closed 3.9 million early this year. [8] Bunker raised $2 million in a seed round in effort to provide insurance for freelancers, otherwise known as on-demand employees.

    These investments pale in comparison to the massive war chests of major insurers. That said, the nimbleness of these startups, tapping into the on-demand hype, could eat away at the market extremely fast.

    Business models are being reinvented as we speak, especially in the insurance sector which is often marked by low customer interaction, limited service levels, complex IT systems, and masses of data. A new digital revolution has created more data enabling new risks, tailored products, performance warranty, and new ways of underwriting. It has given insurance companies access to customers they have not been able to access before. Given the complexity of insurance products, technology can arm agents with resources to access traditional customers in new ways. Industry has also not been growing at the same rate as GNP and is losing relevance. Their is a desperate need for innovation to expand boundaries of insurability in an effort to bring new premiums into the market.

    Disruption may not necessarily mean a complete overhaul to the traditional underwriting and premium model, but can we improve the risk assessment process? What about the way in which policies are sold to consumers? Will insurance policies work like the real-time stock market? Will we need completely different insurance products to safeguard against new and emerging tech such as cyber threats?

    That’s a lot to think about.

    Article written by Kevin Wang and Ali Safavi from Plug and Play Insurance, in collaboration with Munich Re (Robert Mozeika and Philip von der Schulenburg) and Deloitte (Daniel Gadino and Prashanth Ajjampur) and has also been published on http://bit.ly/2a1BTgG 


    [1] http://www2.deloitte.com/content/dam/Deloitte/us/Documents/financial-services/us-fsi-meeting-the-retirement-challenge-09302014.pdf

    [2] http://www.limra.com/Posts/PR/News_Releases/LIMRA_Study_Finds_Majority_of_Gen_X_and_Y_Consumers_Believe_They_Need__More_Life_Insurance,_But_Few_Will_Buy.aspx

    [3] https://youtu.be/IpziR-F3-Qo?t=7m7s

    [4] http://www2.deloitte.com/us/en/pages/financial-services/articles/2014-insurance-mergers-and-acquisitions-outlook.html

    [5] https://www.cbinsights.com/blog/2016-insurance-tech-startup-launches/

    [6] https://www.pwc.com/us/en/insurance/publications/assets/pwc-top-issues-insurtech.pdf

    [7] http://dupress.com/articles/mobility-ecosystem-future-of-auto-insurance/

    [linkedinbadge URL=”https://www.linkedin.com/in/asafavi” connections=”off” mode=”icon” liname=”Ali Safavi”] is Director, Insurance | Senior Venture Associate at Plug and Play Tech Center and this article was originally published on linkedin.

  • user 4:19 pm on July 16, 2016 Permalink | Reply
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    How InsurTech is reinventing insurance 


    Our 2016 global report has just been released with a particular focus on . Yes, yet another -Tech, after RegTech, etc. but it was about time FinTech reaches the industry. While all and everyone in banking and wealth Management has come to realise that digital and Fintech is here to stay, the insurance industry has ultimately come to the same conclusion at a slower pace.

    yet, as of today, 74% of Insurance executives see their industry at risk of disruption through InsurTech over the next years – see Figure 1


    The biggest game-changers that interviewees see in InsurTech are:

    • Responding to changing customer needs and behaviours (most likely through new value propositions and enhanced UX)
    • Using data analytics on existing data to generate better risk assessments


    Even bigger disruption potential lies in combining the IoT (Internet of Things), with smart sensors, and linking it to data analytics for risk assessments. These approaches, however, are not yet in the Focus of Insurance executives around the world. But they soon may be. A shift from risk pooling and “averaging” premiums to individual, tailored solutions even in personal line insurance, incl. risk adjusted pricing, will lead to a “Segment of one”, where every customer is unique and gets her individual insurance solution that fits like a glove.


    Interestingly, not too many well known start-ups have emerged in Insurtech (yet). But the interest especially of the larger insurance companies around the world in artificial intelligence, machine learning, and advanced analytics shows that InsurTech is taking more and more center stage.

    And: other than their colleagues in banking, the insurance industry did not have their 2008 crisis as a “moment of truth”, but still benefits from a untarnished image in the public opinion.

    Lots of opportunities for new (and old) InsurTech start-ups.

    A nice example for the new wave in InsurTech is Berlin-Based P2P start-up “friendsurance” (http://www.friendsurance.com/). For risks that traditional insurance companies are not prepared or willing to underwrite, a p2p sharing (insurance) economy may be the answer.

    People pool their premiums and then decide on pay out against claims from real or virtual “friends”. There are similar ideas around that even take that process decentral, and put it onto a blockchain. Thus we may see insurance-type smart contracts soon managed decentrally on a blockchain.

    Exiting times and clearly worth following the InsurTech field closer.

    Start by reading the full 2016 InsurTech report here: https://www.pwc.lu/en/fintech/docs/pwc-insurtech.pdf

     [linkedinbadge URL=”https://www.linkedin.com/in/ddiemers?trk=pulse-det-athr_prof-art_hdr” connections=”off” mode=”icon” liname=”Dr. Daniel Diemers“] is Partner/ Vice President at Strategy&, a member of the PwC network of firms (formerly Booz & Company)

  • user 6:00 am on July 16, 2016 Permalink | Reply
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    My four Ps of InsurTech 

    A concrete approach to focus innovation efforts in the sector

    The insurance sector, which is considered to be fairly traditional and resistant to change, is currently being overtaken by a macro trend of digital transformation. This is causing institutions with hundreds of years of tradition to rethink their insurance business models, by identifying modules within their own value chain that need to be transformed or reinvented with the help of and data usage. represents a macro trend destined to take on an ever-growing relevance in a world which tends toward hyperconnectivity and the infiltration of technology into all aspects of society. The insurance business will become more InsurTech-oriented, and technology will have a decisive role in reaching strategic goals. This applies to insurance companies, reinsurers, intermediaries and newcomers. During 2015, InsurTech startups received around $2.5 billion in funding, according to LTP.

    Schermata 2016-07-15 alle 15.58.45

    The number of innovative initiatives is growing exponentially, raising interest for all phases of the customer journey and all steps in the insurance value chain. This reveals a very crowded map of innovations that were introduced by the incumbents of the insurance sector or by startups. The innovations can be divided into seven macro areas: awareness, choice, acquisition, use, recommendation, Internet of Things (IoT) and peer-to-peer (P2P). One of the main challenges for analysts, incumbents, startups and investors is identifying the degree of relevance that these innovations represent for the insurance sector.

    InsurTech: My way to answer to the question: “Should I invest on this?” [ Click to Tweet]

    After many discussions with venture capitalists and insurance thought leaders, I’ve come up with my own answer for the following question: What is the potential of each InsurTech initiative? My approach is based on four axes related to the fundamentals of the insurance business:

    1. Profitability: Impact which an innovation may have on the level of profitability of the insurance portfolio, acting on the loss ratio level or on the cost level without an increase of volumes.
    2. Proximity: Contribution for creating improved relationship that is based on numerous touchpoints during the customer journey. Bain’s international research reveals that the customer satisfaction (measured with the Net Promoter Score approach) of those clients that have interacted directly with the insurance company is markedly superior to those who have not. Obviously, there is a predictable relationship between satisfied clients and their economic effects.
    3. Persistence: The reach of the new initiative in terms of renewal rate increase, and thus of stabilization of the insurance portfolio.
    4. Productivity: Evaluation of the contribution that a certain InsurTech approach can have at the top-line insurance level in terms of new client acquisition, cross-selling or additional fee collection for services.

    These considerations refer to a specific innovation initiative and are not absolute. On the contrary, they should be customized to each specific market, line of business, and client segment. In a similar manner, an insurance company has to make these considerations by taking into account both the contribution brought toward the achievement of strategic priorities and the coherence with its distribution approach.

    I am convinced that evaluating InsurTech opportunities based on this pragmatic approach clarifies the rationale behind each innovation initiative. It facilitates the prioritization of initiatives and ultimately helps focus investors’ and innovators’ efforts.

    InsurTech: Connected insurance is here to stay [ Click to Tweet]

    If we consider some connected insurance use cases, it easy to understand the reason why the World Economic Forum identified connected insurance as one of the main insurance innovation trends:

    • Profitability: From this perspective, the experience of the Italian insurance market in motor telematics (which is the most advanced market at an international level, with a 16% penetration for private use vehicles) shows how this approach is able to generate actual value for the insurance bottom line by acting on risk selection and the claims management process.
    • Proximity: Nowadays, within the connected car line of business, there are dozens of different services based on data collected from black boxes—services which the insurance company offers to the final client. By focusing instead on health insurance business, the Chinese insurer Ping An has built an initiative based on connected health that recently raised a round A financing of $500 million, with an evaluation of $3 billion.
    • Persistence: The experience of Discovery Holding in the field of protection has shown relevance when it comes to reducing the lapse rate by using the Vitality approach—which works by identifying and rewarding healthy behaviors.
    • Productivity: The data recorded by sensors represents a great opportunity for getting to know customers and to send personalized offers at the best moment possible. This potential, which is yet to be explored, is precisely the driver that helped create the Neosurance, recently awarded the IoT Newcomer award at the Insurance IoT Europe Summit.


    These insurance approaches suggest the use of sensors for data collection for different business lines. This data refers to the status of an insured risk, and to the telematics for remote transmission and informatics management, alongside the insurance value chain of the collected data. These approaches represent a great opportunity for connecting the insurance sector with its own clients and their risks.

    Italy is today one of the most advanced ecosystems of connected insurance, encompassing 4,9 million auto insurance contracts, which include a box provided by the company, and almost 50,000 home insurance contracts, which are characterized by the use of sensors communicating with the company. In this context, the Connected Insurance Observatory was born: a think tank dedicated to spreading the culture of insurance innovation. I put together the Observatory at the beginning of 2016 with the support of the Italian National Association of Insurance Companies (ANIA). The Observatory has made it possible to unite 30 primary Italian and international insurance groups and some 15 other interested players to bring a contribution to the InsurTech story in the making.

    Matteo is Principal in Bain & Company’s Financial Services and Digital Practices, Founder and Responsible of the Connected Insurance Observatory, Thought Leader in InsurTech, Top 50 InsurTech Influencer.

  • user 6:00 am on July 7, 2016 Permalink | Reply
    Tags: ,   

    What does “Uberisation of Insurance” really mean? 

    Giving the Customer Control

    According to Microsoft’s 2015 Global State of Multichannel Customer Service Report, over 90% of the consumers surveyed said that they expect brands and organisations to have a customer self-service offering.

    AAEAAQAAAAAAAAdcAAAAJDIyODE1MTAzLTIyMGQtNDlhNC1hNmU4LWJjMDNhYTE2YWY5OAA couple of months ago, Day ran a story about Allianz Deutschland’s plans to invest €400m a year in their operations. The focus was on improving customer service and digitalization projects.

    The line that drew my attention was;

    “Half of all people who call us just want to know what the latest information is regarding their current claim,”

    And Allianz receives 35,000 calls a day!

    ” is not a real word

    Although you will find a definition in Wikipedia.And yet it is used daily all over the world to symbolise the shift towards a consumer focused, digital economy. Where individual and collective agency replaces corporate policy. Where under utilised assets are exchanged for near zero transaction costs. Where the dynamics between consumer and provider is equitable, transparent and fair.

    The massive shift in customer service expectations has been driven by online retailers.  With Amazon’s Jeff Bezos undoubtedly leading this trend towards putting the customer first and offering digital access to anytime, anywhere service.

    And when you add digital and mobile capability to this laser focus on the customer, it is easy to see how the likes of AirBnB and Uber are borne. With self-service (literally) in the hands of the consumer, these digital platforms enable consumers to determine what they want, when they want it.

    As Trov CEO, Scott Walchek put it to me; this is the generation of the agent.

    The consumer is in control and the entire demand economy is built on this shift in power from corporates to the individual.

    It’s all about the Customer, stupid!

    This “Uberisation” effect has come to insurance. Where the customer comes first and the insurance business is there to support and not confront in times of loss.

    Which, for insurance, means the claims process. Having had your money, this is the moment of truth when the insurer proves their value to you. Sadly, all too often the experience is a poor one.

    Which is not because the insurer doesn’t try hard. It’s simply that too much money is spent on winning a new customer and not enough on taking care of them once they become a customer. 

    Operational inefficiency is the biggest culprit, which is why the shift towards self-service is so fundamental. 

    It both improves the experience for the customer as well as reduce the cost for the insurer. Which in turn leads to lower premiums which the customer also benefits from. 

    It’s a virtuous circle that is threatening the old world insurers who are tied down with legacy and creating opportunity for those enlightened enough to see it coming.

    I’ve seen the future and it’s here, now

    This is the subject of my latest post for InsurTech Weekly. In an interview with 360Globalnet CEO Paul Stanley, we talk about the move towards self-service, a crowd-sourced workforce and the Uberisation of insurance claims.


    The stats are very impressive from 360Globalnet too!

    • 250,000 claims have been settled using their self-service platform
    • 9 out of 10 customers select to self-serve a claim from a mobile device
    • customers score 10 out of 10 for ease of use
    • Net promoter scores for one UK insurer are in the 70s, putting them ahead of the field and on a par with the very best of online banking
    • settlement times are typically 90 minutes
    • indemnity cost reductions of around 15% for the insurer
    • 100,000 claims have been handled by WithYouIn5, their network of vetted, self-employed, fully qualified insurance agents

    To read the full article at The Digital Insurer, go here.

    [linkedinbadge URL=”https://www.linkedin.com/in/rickhuckstep” connections=”off” mode=”icon” liname=”Rick Huckstep”] is an InsurTech thought leader and editor of InsurTech Weekly for The Digital Insurer.

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