INSIGHT
Hold tight for the big tech shake-up
Death of the insurance salesman?
Is insurance about to experience its own ‘Uber moment’?
By that we mean is it about to be turned on its head by new, tech-savvy startups that carve themselves a sizable chunk of the existing market? Uber, of course, managed it with taxis. Just ask any London cabbie.
Innovate or die
So what’s ruffling the feathers of the insurance industry? As detailed in media business company Marketforce’s report, The Future of General Insurance 2016, there has been a surge of interest in ‘insurtech’, a sub-division of fintech. “While the sums invested [in insurtech] are still dwarfed by the billions being splurged across FinTech as a whole,” says the report, “the growth of InsurTech investment is eye-watering, up from $800m (£620m) in 2014 to $2.6bn (£2bn) in 2015. The first half of 2016 saw funding to insurance tech startups top $1bn (£775m) with deal volume on track to smash 2015 levels.”
Marketforce director, Juliet Knight, doesn’t mince her words: “There is no alternative: insurers must re-invent themselves for the digital age before a challenger forces Uber-style disruption on them…The clock is ticking. Innovate or die.”
Homing in on the insurtech zeitgeist
Just as the rise of fintech has forced banks to adapt how they work, insurtech is impacting the insurance industry. Marketforce’s report says, “Not only are the likes of Aviva, AXA, Allianz, AIG and MetLife building stakes in start-ups, but they are also building their own innovation labs, a model already used by the banks to incubate radical new ideas and foster experimentation without putting the core business at risk.”
Homing in on the zeitgeist, Techworld.com recently introduced ‘14 UK insurtech startups to watch’. Head of digital innovation at insurance giant Aviva, Paul Heybourne, told journalist Scott Carey: “VCs are buzzing with [insurtech] a lot more than they were a few years ago with fintech and payments. Still, we are yet to see any true disruption, so perhaps that is why we are at the top of the hype cycle, but it's only a matter of time.”
Chalk and cheese
According to the Marketplace report, only 10% of insurers offer coverage for the sharing economy. British insurtech firm GUARDHOG is leading the field by targeting the sector with admirable success.
In a recent interview with Deemly, co-founder Humphrey Bowles was understandably jubilant about beating long-established insurers at their own game. “The sharing economy, normally characterised by fast-paced, lean try-it-and-see models, couldn’t be more opposite to the slow-paced and cautious world of insurance, so it’s no great surprise they get on as well as chalk and cheese,” said Humphrey. “Put simply, traditional models of insurance do not fit and the sharing economy requires a very different approach.”
This different approach to a change-averse market is practised by all insurtech companies, who each target their own niche. For example, Slice is aimed at gig economy workers, from delivery personnel to drivers and accommodation hosts. Soon they’ll be branching out to dog walkers, handymen and cleaners.
Bungalow is targeting the growing market of millennials who are renting properties and require flexible policies designed with modern consumers in mind.
Insurance Startup of the Year at the British Insurance Awards, SafeShare Global, has its sights set on sharing economy platforms, which can use it to insure everything from car sharers to contractors.
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The rise of the uninsurables
Meanwhile Business Weekly notes that, “the gathering momentum behind InsurTech is likely to result in significant changes to the insurance market in the years ahead. It has the potential to create more personalised, fairly priced products and the use of smartphone apps by insurers to interact directly with customers, creates a more flexible, efficient and scalable structure.”
However, Business Weekly goes on to sound a note of caution. Big Data and insurtech go hand in hand, so there could come a day when customers whose statistics aren’t up to scratch can’t get insurance. “Ethically, there is a danger that with the increased use of Big Data in calculating premiums, ‘uninsurables’ (high risk individuals who cannot obtain or afford insurance) will emerge,” writes Georgina Perrott. “This is particularly the case in the health and life insurance sectors where companies are already offering gene sequencing to identify risks to an individual’s health before they develop.”
Even if uninsurables become a thing, it’s reasonable to assume it will only be a matter of time before even they are targeted by a forward-thinking insurtech company. The disruptive merry-go-round goes on.
It gets even better. Unlike traditional telecommunications services, Cloud Voice operates on a licence-based model, so you pay a fixed monthly fee based on your usage – there are no nasty surprises.
Moving telephony and call handling to a single, hosted, managed network makes it easier to predict budgets. And that’s the kind of freedom that allows you to grow, disrupt, surprise and thrive.
Tim says, “We’re creating cost certainty for businesses on their telecoms spend. Previously an organisation would have to buy a PBX regardless of whether they had 200 employees or 2000. With the scale and agility of a cloud-based PBX, a business only needs to buy as many licences as it has employees. It’s easy to scale up or down, so you can respond quickly to the unexpected.”