When I first spotted #Shift #Technology with their focus on #fraud detection for #insurance, I assumed I would find a venture in Israel (which is known for smarts in finding the bad guys in cyberspace, as we outlined when we went to Israel on our #Fintech global tour). So I was surprised to find that…Read more Shift Technology #using AI to #battle Insurance Fraud insuretech
Bank Innovation
#Prediction and prognostication must be traits buried right in the genetic core of the human species. People’s desire to peer around the corner into what they can’t see and try to make sense of the shapes and shadows is almost a basic need. It makes us feel smart, it provides comfort as a source of clarity, it lets us show off our expertise.
So, while I may be motivated by some weird base instinct to call the #insurance industry’s shots- I also genuinely think the next year will turn out to be unlike any the industry has ever seen. At the least, we’re beginning to see some tectonic shifts in how insurance does business as it starts succumbing to the inexorable forces of #technology, customer demand, and most importantly, as it finally gives in to good old fashion evolution.
Here are the three big trends in insurance that I see taking shape over the next twelve months.
1. Venture capital firms will start to pick #insurtech leaders
There’s strong demand for insurance technology investments in the VC community right now. According to CB Insights, there was $2.65 billion in VC investments in insurtech companies in 2015, about three-and-a-half times the amount invested in similar companies the prior year. This makes sense too. Insurance is one of the remaining industries that hasn’t yet taken a huge, technology-based step forward and VCs are finally realizing the potential impact technology could have on how it’s bought, sold and administered.
So, while there has been a massive demand for insurance investments from the VC community, beyond employee benefits, the actual pace of investment has been relatively low due to an almost complete lack of investment opportunities with attractive business models, proven teams, and productive uses for their capital. Even including benefits, while $2.65 billion is a lot of money, it’s a small percentage of the $128.5 billion in VC money that was raised last year.
Over the course of the next year, we’ll see a few strong financial models emerge from companies who took seed rounds over the last 18 months that will attract sizable Series A rounds to fund growth and establish leads in their market segments. The noise and buzz around insurtech has already spawned a growing number of me-too copycats and business model clones but, as has happened with other formerly hot sectors for venture capital- the on-demand economy and marketplace lending- the benefits of scale and access to capital will accrue almost entirely to the innovative first movers.
2. Carriers will start more meaningful partnerships with startups to drive innovation
You can bet that all carriers are already having discussions about this in their boardrooms right now, it’s reflected in strategic VC investments even if not yet in meaningful operating partnerships, but over the next year we’ll see which carriers will actually pull the trigger on deals – be it acquisitions or partnerships – that lean on startups to help them jumpstart the pace of innovation inside the company. We’ve started to see meaningful partnerships with technology companies from the large #banks only recently, but there is reason to think that insurers will move faster.
Most of this activity will happen around finding new means of distribution, new ways to help claims adjusting, big data analysis for underwriting, and early efforts at incorporating the Internet of Things. It will be a fairly incredible thing to see for a couple reasons: first, it will be impressive to see massive companies realize that they can no longer “move at the speed of insurance,” and, second forward-thinking carriers who welcome technology to the fold will create sizeable business advantages against their more luddite rivals, and do so more quickly than ever before possible.
3. Migration of talent from old guard companies to insurtech startups
As insurtech companies raise larger amounts of capital, more and more executives from established insurance companies will start to join their ranks. Lemonade’s hires from AIG and ACE and Embroker’s own recent addition of Tom DeMichael from Willis will be the first wave of a larger trend as property and casualty focused startups will by their nature require more industry expertise than the first wave of employee benefits startups like Zenefits.
As funding increases for insurtech leaders (see prediction No. 1), on-hand cash at these startups will allow them to lure top talent away from the industry giants, just as the massive carriers and brokers alike will be adjusting to the brave, new world of insurance by trying to cut bloated cost structures. Seasoned execs that are dynamic enough to thrive in the fast-moving startup environment will be in short supply, creating great opportunities for the available free agents and new entrants alike.
Each of these are trends that will be at play not only over the next 12 months, but for several years at least to come. However, I expect now is when we’ll start to see real movement on each. One thing is clear: the insurance industry – as well as the burgeoning insurtech market – will be an incredibly interesting space to watch.
[linkedinbadge URL=”https://www.linkedin.com/in/millermatthewc” connections=”off” mode=”icon” liname=”Matt Miller”] is founder & CEO of Embroker and a version of this post first appeared in the Embroker Blog
Insurtech is becoming one of the most relevant sources of change in the #insurance sector, being characterized by a growing request for innovation of both approach and #technology.
Italian insurance IoT is taking over the international scene thanks to the excellence of its offer, being one of the top countries globally – this applies to the car sector but also to health and home. According to the data elaborated by the Observatory of Connected Insurance, the Italian market has the highest levels of penetration – 16 % – in the car insurance sector. The Observatory of Connected Insurance is a think-tank created by Bain & Company which has managed to get together ANIA alongside 30 primary international insurance and reinsurance groups.
This trend has been confirmed by the Italian start-ups in the #insurtech sector that have a crucial pioneering role thanks to the innovation proposals that they bring as an answer to a sophisticated market request. The recent nomination of 4 Italian start-ups among the 5 finalists in their category for the Insurance IoT Europe Awards which will take place on the 7th of June in London, supports the fact that #Italy is ahead of the game.
The shortlisted candidates for the Insurance IoT Newcomer Award are: DigitalTech, Domotz, Innotech Connected Solutions, Neosurance and Roost. The shortlisted candidates for the IoT Innovator of the Year Award include Baseline Telematics, Dacadoo, Homeserve Labs, ROC Connect and Things Network. Insurance IoT Europe (7-8 June 2016, London), is a two-day event that brings 150 insurers together to talk about how to thrive in a connected world as digital and big data collide. This is the only event focusing 100% on IoT for the insurance industry.
The winners will be announced during the networking drinks reception on June 7th at the Insurance IoT Europe Summit. More information coming soon on the official website of the event: http://www.fc-bi.com/insuranceiot
#Auto #Insurance is growing fast in emerging markets as people get their first car. Telematics can create a more personalised risk premium. Claims processing is in transformation as auto body shops and consumers form into networks through maps and mobile phones. Meanwhile consensus is emerging that greater adoption of driverRead More
Bank Innovation
#Blockchain startup R3CEV has added Hong Kong-based #life #insurance group AIA to the ranks of its global banking #consortium.
CoinDesk
#Blockchain. 10 letters of headache, 10 letters of wonder. Over the last few years and months, this technological piece of art has been gaining traction among developers, journalists and citizens. And quite naturally, the blockchain hype has also knocked on the doors of #AXA: our corporate venture capital fund AXA Strategic Ventures invested in Blockstream, our trend sensing outposts AXA Labs reported a lot of activity in the field and I led an internal effort by the AXA Foresight squad to raise awareness on the #technology and its potential.
What do insurers basically do for their consumers? They collect money from policyholders, manage it and run a process of claims to re-allocate the pooled money to the relevant policyholders. Now Blockchain allows to program trust in a distributed way, which threatens the central role of insurers in the current #insurance process. If we consider the barriers to entry in the insurance sector, the disruptive potential of Blockchain is even more striking: capital constraints could be overcome by crowdfunded Decentralized Autonomous Organizations; claims management could be automated through smart contracts; the power of the brand would disappear as trust can be programmed; actuarial skills could be replaced by open logs of claims and data science.
If we look at the topic through the lens of the value chain, the disrupting power of Blockchain is all the more tangible:
1. Product design: blockchain-based products will hold more promises to customers (e.g. instant payments) than traditional ones
2. Pricing: as blockchain allows transparency of information, a combination of Blockchain and Data Science could allow dynamic price adjustments
3. Distribution: Blockchain could become a new distribution channel, as blockchain players sell services that combine well with insurance (e.g. stadium ticketing through Colu could be complemented with an additional stadium insurance option linked to the ticket)
4. Underwriting: automated contracts combined with blockchain-based identification tools such as tradle.io or uPort could enable advanced insurers to close a sale in no time
5. Claims management: with simplified products and smart contracts, the first blockchain insurers will potentially post expense ratios much lower than incumbents, all the more if back office is automated too (e.g. blockchain-based automated request for claim adjustment)
Obviously, insurers do not only offer plain coverage but also services that Blockchain will have a harder time disrupt. I nonetheless take very seriously initiatives like Dynamis (a blockchain-based unemployment insurer) for several reasons: those initiatives are led by skilled people that should be considered our benchmark in terms of blockchain mastering ; such disruptors are able to get round incumbents strongholds and willing to recreate the insurance industry from scratch, which makes any condescending attitude towards them highly dangerous; they invent new classes of products (in the case of Dynamis, through leveraging LinkedIn), which can be beneficial to the whole insurance industry.
With a good deal of work and humility, I believe insurance incumbents can also take advantage of the vast opportunities of Blockchain: we could help blockchain users better secure their private keys, act as oracles (i.e. trusted data providers) for disruptors, or improve user experience through more trusted and rapid claim handling. Assistance companies could provide field services for pure players like slock.it (Ethereum-based renting solution), thus providing incumbents with their fair share in the success of disruptors.
Blockchain is a promise for our consumers. A promise of undisputed trust, a promise of radical efficiency, a promise of smart insurance products. Keeping those promises cannot be anything else than a tremendous opportunity for insurers. Let’s get to work!
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