9 Insurtech Trends

from Insurance Innovators Summit 2018

A blog by buzzvault
On the 5 – 6 November, buzzvault was in Westminster attending the Insurance Innovators Summit 2018.

With attendees from all over Europe, this was a great chance to meet new people and keep a tab on the ebb and flow of industry debate.

So here we go with our event diary* and collected thoughts on the overarching trends in evidence at this year’s show.

With presentations across three different stages, it was impossible for us to catch everything, so there’s no claim here to completeness

– Day 1 Morning –

The Insurance Innovators Summit 2018 was held at the Queen Elizabeth II Centre outside the Houses of Parliament – only a short taxi ride from buzzvault’s Soho offices. But, as conference-goers old and young know all too well, the fun only begins when you’ve set up your stand.

In scenes reminiscent of Crystal Maze, we got things up and running at a canter, carving ourselves a nice prominent corner in the “Insurtech Zone”. With our stand looking spic and span, it was time to hit the auditorium.

1. How do incumbents work with startups?

The show began with keynotes from Ageas, InShared and Allianz’s digital investment arm, Allianz X, looking broadly at innovation in insurance.

Now, while everyone is in agreement that there’s plenty of innovation around, opinions diverge widely on how to harness it. Should insurers and start-ups go it alone or try to work together?

According to figures from Allianz X, fewer than 10% of European Insurtechs fall into the “Insurtech carrier” category. Conversely, 20-30% of them act as intermediaries (the remainder being, essentially, software vendors).

This distribution certainly suggests there’s mileage in the partnership route. Typically, this sees startups acting as front of shop – packaging and distributing products. Meanwhile, underwriting capacity is provided by an insurer at the back end.

This arrangement saves startups the need to put up risk capital, which is perhaps the insurance market’s single biggest barrier to entry. Other key advantages for startups discussed during the keynotes included:

  • Use of incumbents’ data and data-modelling capabilities
  • Incumbents’ regulatory expertise
  • Access to regulatory capital

These latter two points are particularly significant given how heavily regulated the insurance industry is and how, generally speaking, independent VCs are reluctant to finance regulatory capital.

buzzvault at Insurance Innovators Summit 2018

 buzzvault’s Alexander Cherry and Isabella Hernandez

As for the benefits reaped by incumbents, partnering with startups lets them access new markets and technology with minimal upfront costs.

Reducing the “cost per idea” means that incumbents can gain exposure not just to a single innovation but to a portfolio of innovations. This spreads their “innovation risk” and increases their flexibility going forwards.

“No European Insurtech backed by corporate VC had ever gone bankrupt.”

Allianz X’s Head of Strategy and New Business Nina Fichtl pointed out that this investor style of thinking isn’t necessarily that big a pivot for today’s insurers. After all, Allianz was a sponsor of motor racing at the beginning of the 20th century (when auto insurance was the disruption du jour). Nowadays, it is an investor in, and sponsor of, the drone-racing league.

Fichtl noted that no European Insurtech backed by corporate VC had ever gone bankrupt. An encouraging sign no doubt – but there remain many other ways to innovate, from in-house implementations to innovation hubs and sandboxes. The only strategy guaranteed to fail is taking no risks at all.

At buzzvault we have chosen the partnership route to innovation, bringing our home insurance vision to market with the backing of Munich Re. To see what we’ve built, why not give our beta a spin.

2. Where we’re at with telematics

Auto telematics was the original Insurtech, before Insurtech was even cool. Now, 20 years in, it’s a great testament to the capacity to innovate of an industry often slated for its complete inability to do so.

The Floow’s Matthew Chalk revealed that smartphone telematics now constitutes 1/3 of the market.

This has been key to taking telematics from niche to mainstream product. App-based models have reduced barriers to entry by removing the need for insurers to white-label black boxes and customers to get them installed.

This said, tests involving black boxes and telematics apps have shown up significant discrepancies in the data generated. All of which raises the question: what is the value of telematics data?

For Chalk, the success of telematics programmes to date has been all about self-selection. ‘The device may as well be a piece of cheese,’ he quipped.

But that cheese is about to get a lot smarter. According to Chalk, insurers are on the cusp of seriously unlocking the value in the telematics data and delivering on the industry’s long-avowed promise: coaching driver safety directly through data-derived insights.

It was now time to break for some matutinal popcorn and a cup of coffee …

buzzvault at Insurance Innovators Summit 2018

© buzzvault

3. Can insurance be a pull product?

Pavlov was a skilled bloke but he never could get his dog to love insurance. And the evidence – from centuries of insurance under-penetration and griping claimants – is that it’s pretty hard to get humans to love it too.

So, if selling the insurance dream isn’t the best angle for insurance companies, what on Earth is?

It was time for that part of the conference that we like best: getting up on stage. buzzvault’s MD of Insurance Product Charlotte Halkett was joined by Smart Communication’s James Brown, ZugarZnap’s Alan Hickman and SpareBank 1 Insurance’s Christian Krogtoft to talk about turning insurance from a push product into a pull product.

Charlotte Halkett buzzvault speaking at Insurance Innovators Summit 2018

©  Insurance Innovators

Whatever insurers do, they’ll need to change how they communicate – coming into line with other customer-facing industries in the digital age. To do this, they must reflect firstly on what customers want and secondly on what they want to hear.

“Insurance is the great enabler – how can we support customers to live the life they want to live?”
Charlotte Halkett, MD of Insurance Product at buzzvault

For instance, young drivers don’t really want auto insurance, they want to get on the road – maybe they’ve got a new job, maybe they have relatives to look after, maybe all they want is a road trip. By thinking in these terms, we see how insurance could be more than an unfortunate afterthought, something customers reach out for directly, a pull product.

However, there’s a limit to how far communications on their own can take you (sorry, marketeers!). If you still need to ask each customer 20 technical questions to price your policies, then you won’t really transform the way your product is perceived.

That’s why it’s important to go one step further. Where marketing ends, product innovation begins: can insurers find ways to ask 20 insurance questions without, well, asking 20 insurance questions?
Cue embedding. By finding relevant ways to embed your product into customers’ lives, you can access the information you need without first having to overcome customer apathy.

For example, buzzvault has embedded home and contents insurance into the process of moving house.

The goal isn’t to resemble your customer’s Playstation, Netflix or Instagram – it’s to look less like their old insurer.

A staple part of the house-move process is a survey – used by removal firms to allocate capacity and draft accurate removal quotes. This survey creates detailed household inventory data – gold dust from an insurance POV. By selling in home and contents cover at this point, with this data, we can offer our customers hyper-personalised protection at minimal additional effort.

This isn’t to say there are no insurance questions – nor can this really be the aim. Insurers should not hold themselves to unrealistic standards of customer delight. The goal isn’t to resemble your customer’s Playstation, Netflix or Instagram – it’s to look less like their old insurer.

Intrigued to take a look at buzzvault’s hyper-personalised approach to home & contents insurance? Why not sign up for their beta here?

Insurance Innovators Summit 2018 Panel

© buzzvault
ZugarZnap’s Alan Hickman, Moderator Declan Curry, buzzvault’s Charlotte Halkett, Smart Communication’s James Brown and SpareBank 1 Insurance’s Christian Krogtoft

– Day 1 Afternoon –

4. When did anyone ever ask for AI, Blockchain or Chatbots?

We live in an age of technological marvels but, at the end of the day, tech is just a solution to somebody’s problem. Customers don’t care about AI. Customers don’t care about Blockchain. I’m not going to insure my things with you because you have a Chatbot (a chatwhat?).

So the first presentation we caught after lunch – from pet insurer Bought By Many’s Steven Mendel – was a salutary reminder to get away from tech for tech’s sake and back to priceproduct and experience.

What was particularly interesting about Bought By Many’s case study was the active role in product development that they’ve given their customers.

Insurance Innovators Summit 2018 - Steven Mendel

Bought by Many emailed 120,000 pet owners about what their ideal pet insurance policy would look like and used the 40,000 responses to create a succession of new products in the pet line.

Things they integrated into their products, based on customer feedback, included zero-deductible policies and better proposal forms. They also took the decision, at least for now, to avoid downloadable insurance apps.

A final touch they’ve incorporated into their customer service is a handwritten letter of condolence to all pet owners that have lost a pet!

5. Future of Insurance debate: Brolly vs. Admiral

The final session of the day was a fireside chat on future-proofing insurance. Doing battle this afternoon were Brolly CEO Phoebe Hugh and Group Chief Executive of Admiral and self-confessed curmudgeon David Stevens, ably moderated by Declan Curry. Champagne was served.

Insurance Innovators Summit 2018

Wales-headquartered car insurer Admiral is itself a relative newcomer to the centuries-old insurance market, having been founded in 1993 – but was today representing the old guard of insurance. Flying the flag for disruptors was Brolly, the “digital concierge” for personal insurance.

Brolly was founded in 2016 to address a perceived mismatch between what people think they’re covered for and what they’re actually covered for. By plugging the gaps, Brolly ensures no-one is left high and dry on claims day.

When asked whether he feared Insurtech, Stevens responded that Insurtech startups are quite low down his threat list. Brolly’s Hugh would not be drawn on whether she regards incumbents as competitors, stating that Brolly’s ambition is simply ‘to build a great product for consumers’.

Looking at hurdles facing the Insurtech sector overall, Stevens pointed to both claims costs and customer acquisition as problem areas.

These are unsexy areas that we’re unaccustomed to hearing about from Insurtech startups. Messages around customer convenience, fairness and an anti-bureaucratic approach are naturally much more marketable.

However, if you cannot control your claim costs – estimated by Stevens to account for 3/4 of a typical insurer’s outgoings – then you won’t last long. Not every startup is as well financed as Lemonade, and even they recently announced a strategic shift away from growth to tackling their loss ratio.

The same consideration applies to the cost of customer acquisition, something Stevens believes Insurtechs are often overly optimistic on.

These are certainly fears that stalk the minds of Insurtech entrepreneurs, all of which further recommends the partnership route. By choosing to operate as an MGA for instance, a startup can pass liability for claims on to another party. **

Insurance Innovators Summit 2018

** buzzvault operates as an MGA with the backing of Munich Re. Check out our home insurance beta here.

Weighing up the challenges faced by Insurtechs invites us to ask an even bigger question: what is the value for consumers of the transparency, personalisation and experience they offer?

Apple beat Nokia at phones with a philosophy built entirely around customer delight, but will customers go out of their way for insurance’s latest upgrade? David Stevens thought not:

‘Our customers don’t care about insurance, don’t know much about it, want to get it over and done with as soon as possible and to pay as little as possible for it.’

And there is plenty of truth in this. Few customers will ever pick up the phone wanting to discuss the role of different parameters in calculating their policy price. However, does this observation do justice to “transparency” as a customer criterion?

Arguably, the whole problem with today’s insurance is that it is too transparent. Policy documents are worded as they are to eliminate ambiguity in the eyes of lawyers. And thus do we lose sight of the delightful Jaffa Cake amid interminable definitions of “cake” and “biscuit”.

Insurance Innovators Summit 2018

Principally, customers want to know what’s covered, when it’s covered and how to claim. And lay answers to whatever lay questions they care to pose.

The average insurance customer has considerable knowledge gaps in some, if not all, of the foregoing departments. Brolly’s Hugh sees in this the path for Insurtech products to break out of the early-adopter and finance-savvy customer segments and enter the mainstream.

This isn’t about selling financial management as the new yoga, it’s about helping people make the financial decisions that they need to make and doing so on their own terms and in response to their basic drivers.

No, customers won’t start queuing the day before to buy the latest policy; no, we won’t have “insurance fanboys” (*shudders*). But this isn’t a problem. Indeed, the supposed characteristics of next-gen insurance are consistently overstated. As, by the same token, is the perversity of the legacy industry.

Like with so many problems, this boils down to designing simple interfaces for complex things (iOS is simple, iPhones are complex). This is doubly hard in insurance due to the number of front-line complexities (like those pesky policy exclusions, much-maligned but sound upon reflection) and the requirement that none of this be misrepresented or mis-sold.

Is Insurtech up to the challenge? Well, the time is upon us to find out, with the sector at an inflection point in terms of maturity. buzzvault is glad to be part of a growing raft of new products launching in 2018 (get the beta here), and looks forward to keeping you updated throughout 2019!

6. Bonfire Night Extravaganza

Having sagely steered clear of any bonfire-night analogies in the face-off between incumbents and Insurtechs, it was now time to embrace the seasonal spirit and set fire to things.

Up on stage, for our post-conference delectation, was the closest thing to a firework display without actual combustion.

Kicking off the evening: a light show

Insurance Innovators Summit 2018 Light Show

© Insurance Innovators

Insurance Innovators after party: mulled cider

Insurance Innovators Summit 2018 - Mulled Wine
© Insurance Innovators

In full flow: Insurance Innovators after party

Insurance Innovators Summit 2018 After Party
© Insurance Innovators

– Day 2 –

Upon the light show at the end of day 1, there followed a food and drinks reception with a bonfire-night theme. This included hot-dogs, toasted marshmallows, beer, champagne, mulled cider and whisky.

As the second morning rolled around, we therefore found ourselves in a more reflective mood than we had been on the first day.

Often, it’s only during the second day, once you’ve digested the impressions of the first, that the overarching themes of a show become apparent. So what were some of the main narrative threads across this year’s event?

7. Talent Acquisition, retention and development

Having a wide spectrum of perspectives has never been as important as it is today, and insurance is rightly concerned to broaden its diversity.

This is not just about opening up what has traditionally been a very white, very male industry, it’s also about bringing people from entirely different career backgrounds and industries to the table. Indeed, this year’s Insurance Innovators Summit featured out-of-industry speakers from Facebook, Google, BT and more.

There were lots of different approaches under discussion (and we’re sure we missed a few too).

When asked how to attract people from outside the traditional insurance fold, Cheryl Agius responded that it’s important to do interesting things and to work with interesting partners.

Indeed, there’s an oft-neglected PR angle to insurers’ activities around innovation hubs. These act as excellent statements of intent and ambition, which has implications for everything from hiring through to outside investment. So, while business results are the gold standard, the success or failure of innovation hubs cannot be accounted for by this alone.

For example, one of the reasons given by Aviva MD of Digital and Retail Blair Turnbull for their decision to establish a digital garage in Hoxton was to attract more data scientists to their organisation.

Whether we’re talking about diversity of skills or diversity of social backgrounds, this is not an issue the industry will solve overnight. But it should be easier to build in diversity from the outset than retrofitting it.

This is one of the reasons why buzzvault has founded the buzzingfor50 initiative promoting equal representation for women in tech and women in insurance. Over the past year, we’ve established a presence at a number of grassroots events and, in 2019, we are introducing a work-experience scheme at our Soho office in partnership with Beyond the Classroom.

buzzvault at Insurance Innovators Summit 2018

Bought By Many’s Steven Mendel with buzzvault’s Isabella Hernandez and Charlotte Halkett

8. Me-conomy versus Meh-conomy

Since its inception, insurance has sat, more or less comfortably, within a box labelled insurance, next to all the other product boxes.

The major shift wrought by today’s digital era is the abolition of traditional product categories. There is now two-way communication with consumers via a multiplicity of channels that never existed before: the “me-conomy”.

Within the “me-conomy”, customers share personal data with digital companies in exchange for services – and it’s up to them whether they strike a deal of not (a position only strengthened by GDPR legislation).

In short: I’ll share my data if it’s useful to me. The possibilities unlocked by digital technology are enormous – but companies will not be judged directly on their tech, they will be judged on their value proposition. And if that is found wanting, well, you’re just another storefront in the meh-economy.

Insurance Innovators Summit 2018 - Insurtech Zone

Lunch in the Insurtech Zone

Insurance too is participating in the me-conomy. Like digital butlers, insurers are seeking that right time and that right place, ready to serve a relevant “moment” within a customer’s life.

The place could be a customer mobile, a smart leak detector or an Amazon Alexa. The time could be after clicking, or saying, “purchase”, after logging into airport Wi-Fi or, in buzzvault’s case, moving home.

The me-conomy isn’t just information provided directly by a customer, it’s also information provided by other parties with their consent. For insurers to fully participate, they need to be open to integrations with other companies and even to bundling with other products and services.

Likewise, consumer excitement around “insurance devices” is understandably meh.

As Hanne Tuomisto-Inch, Senior Industry Head Finance at Google, commented in a panel session on “helping customers delight in their insurance”, ‘people don’t want an assisted experience around health insurance but perhaps around health.’

We are seeing this kind of holistic thinking already in IoT-supported home insurance. For insurers, the economics of providing customers with expensive home kit for free rarely stacks up. Likewise, consumer excitement around “insurance devices” is understandably meh.

But an insurance offering could weigh in the balance, alongside plenty of other benefits, for customers contemplating the purchase of a generic smart home device – so a series of integrations here will take you (and your partners) from meh straight to me, the customer.

Or just look at Amazon Prime – if it were solely a logistics service for busy people, or a bolt-on to your Kindle or a Netflix competitor, it would have far less success than it has currently as a genie-in-a-lamp lifestyle product.

Insurance Innovators Summit 2018 - Insurtech Zone

Laka pitching bike insurance and beyond in the Insurtech Zone

buzzvault home and contents insurance taps into rich household inventory data at the point of moving house, allowing customers to get quoted instantly for hyper-personalised home insurance. We launch later this month, so why not sign up to their beta and we’ll keep you posted.

9. Enter Big Tech: Google, Amazon, Facebook

No conference, or précis of industry trends, would be complete without a sideways glance at Big Tech and what – if anything – they are doing within insurance.

Amazon has been assembling a London-based insurance team since last year, and indications are that they may be launching an insurance comparison website. Google has already been and gone, but we feel this isn’t the end of the story. And as for Facebook, well, who knows?

For Admiral’s David Stevens, speaking in the future-proofing insurance debate alongside Brolly, these guys are a threat precisely because they know more about insurers’ customers than insurers do. And, according to Capgemini’s World Insurance Report30% of customers would be perfectly happy buying their insurance from Big Tech.

What makes – or could make – Big Tech attractive to consumers? Two key angles repeated throughout the discussions at this year’s Insurance Innovators Summit were price and convenience.

Price is obviously important, and for some demographics and categories it’s absolutely paramount (young drivers for example). But the prevailing sentiment was that price may be overvalued. And that what customers really value about the “Amazon Experience” is that it’s hyper-convenient and lets them live the life, or the moment in life, that they want to live.

buzzvault Tweet Results - Insurance Innovators Summit 2018

Perhaps the debate about cost and convenience has no clear answer though. Convenience underpins the exchange of customer data in today’s “me-conomy”, and it is this data that, over the long run, creates efficiencies and the potential, where relevant, for discounts. On some level, creating convenient products is the fastest track to pricing efficiency.

When we wrote above that convenience makes the wheels of the me-conomy go round, we forgot to mention one thing: trust.

So does this mean that Big Tech have the insurance market stitched up? Not necessarily.

When we wrote above that convenience makes the wheels of the me-conomy go round, we forgot to mention one thing: trust.

Any exchange must work on a transactional level (am I getting what I want in return?) but I must also be confident that sharing my data won’t have any unexpected consequences for me down the line.  And this has not been uniformly the case with Big Tech over recent months …

Parliament Square photo

It’s also debatable whether getting deep into insurance is truly in the interests of Big Tech.

These companies are all 100% “pull” products built on actively delighting customers, and they have gargantuan, highly profitable franchises built on this principle.

While insurance can certainly be a lot more delightful than it is today, we’re not sure it can be as delightful as one-click Christmas shopping or unlimited streaming.

And we’ve not even touched on claims. If your brand has only ever been associated with differing degrees of satisfaction, why would you open the door, even just a crack, to the sort of litigious discontent that can arise from a rejected claim?

For this reason, Big Tech might regard insurance with caution, as something that could dilute their brand and undermine their higher-margin products …

Insurance, as they say, is not an industry for the faint of heart.

Alexander Cherry, buzzvault | Insurance Innovators

Alex Cherry

Content Head, buzzvault

buzzvault brings you game-changing personalised home & contents insurance – so that you can get on with your day safe in the knowledge you’re covered. Catalogue your worldly possessions in under 15 minutes, from the convenience of your smartphone, and claim back just as quickly. That’s insurance as it should be. For more information visit https://gobuzzvault.com Press & Mediapress@gobuzzvault.com Investorsinvestor@gobuzzvault.com Insurance Partnershipspartnership@gobuzzvault.com Or follow us at on Twitter and LinkedIn