Looking forward with InsurTech Insights 2017

Written by Rick Huckstep

Who would have thought it! A year ago, there were just a handful of InsurTech prediction lists. Twelve months on, it's a different world! There are literally dozens of them.

This time last year, these were my InsurTech predictions for the Daily Fintech. Looking back at them, I missed the mark on some, a few I got right, and some just need a little more time to evolve.  

For those interested in my POV, you can find the complete post of my 2017 InsurTech predictions here at The Digital Insurer.

In no particular order, here are ten of my predictions for the coming year.

#1 Lemonade will provide the Uber moment the industry has been waiting for

The Lemonade story is quite phenomenal. In a little over a year; they built a tech platform to operate as a full stack carrier. They got licensed in one of the toughest States in the US. They raised $60m investment and got underwritten at Lloyd’s. They went live in September with a 5x cheaper proposition that customers are tweeting about. Just before Christmas, they announced plans to go nationwide in 2017.

Not everyone agrees with me as the opinion expressed in this twitter poll shows. Which is why prediction can be so much fun!

For more on Lemonade, go here and here.

# 2 Blockchain will move rapidly from pilot to POC in the commercial and wholesale markets. 

There will be two techs that dominate insurance in 2017. One will be blockchain and I stand by the predication I made a year ago on this.

One to watch is London based, ChainThat. To find out more about why blockchain matters to the insurance markets, go here and here for more on ChainThat. And look out for more on this subject in the next issue of InsurTech Insights later on in January.

#3 AI will dominate mobile customer engagement

The other key tech that will dominate insurance in 2017 is Artificial Intelligence (see early reports on the success of Amazon’s Alexa). AI takes many forms, but the focus will be customer experience. Talking to a bot wont replace every interaction, humans will still want to talk with a human after, say a traffic accident. And whilst AI still has a way to go, the tech will enable insurers to serve mobile customers at their point of need (customer’s need, not the insurers need!). To see the future, go East young man and look at WeChat and Zhong An.

AI will be the subject covered in the February issue InsurTech Insights. This includes an updated discussion with Spixii, who I first covered back in April 2016.

#4 Customer Experience will replace Operational Efficiency as No1 strategic agenda in the boardroom

There’s been enough navel gazing on this one. If incumbents have learnt one thing from the InsurTech startups, it’s that focusing on the customer is the secret to success. Encumbered with legacy IT, large work forces and unwieldy workflows, the largest insurers cannot change quickly enough (4th Industrial Revolution and all that!). They will start to separate out their legacy insurance operations and create wholly new digital insurance businesses in partnership with InsurTech digital platforms. As Gartner predicted back in 2015, the fastest growing companies will have fewer employees than smart machines. The largest insurers will become as nimble and agile as a startup!

Here’s an article I posted at the start of the year entitled “how the incumbents are responding to InsurTech”.

#5 InsurTech will merge into the mainstream and become Business As Usual by end 2017

For an industry that is used to coming second to a snail in the 1 metre dash, the move to embrace InsurTech has been a revelation! By the end of the year, the lines will be blurred between the innovative startup and the incumbent insurers. The number of startups will also start to fall away as the gaps and spaces for innovative thinking run dry (for a while at least). We will see several things happen as the old and new world fuse together;

• Incumbent insurers will partner with InsurTech platforms to launch new digital products (see #4 above)
• Digital strategies take hold within established insurers as they build their own capability
• InsurTech startups will be acquired by the established players on the supply side as they seek relevancy (such as software vendors, like Guidewire; the tech providers, like IBM; and the consultancies, like, all of them!)
• First generation InsurTech’ers hit scale and become mainstream 

#6 Personal lines value-chain will start to change shape

#7 Connected Insurance will remain a distribution play

Telematics, Wearables and IOT all promise better risk management and customer engagement. But, despite lots of activity in the market from both startups and incumbents, the underlying insurance products remain largely the same. Until actuaries define whole new models and insurers start to underwrite products using these new sources of data, the use cases for connected insurance will continue to be defined by how products are distributed, not by how they are priced.

The must read commentator on this segment of Insurtech is Andrew Dart for Connected Insurance.

#8 P2P Insurance will still be searching for scale at the end 2017

So far, no business model has come forward and defined what P2P Insurance is. However, they all have one thing in common, which is to redefine trust in the relationship between insured and insurer. This is a noble ambition and long overdue. Personally, I want to see P2P insurance succeed and establish itself as a significant way of doing insurance business. I see many merits in all 3 waves of P2P insurance.

However, just maybe, when we look back at how Lemonade have redefined trust in 2017, we will also see the beginning of the end of P2P insurance. Just saying!

Read InsurTech Insights for more on this subject.

#9 The “buying” of insurance will get easier

Some might say that this one's a bit bleeding' obvious! But you'd have to ask them when was the last time they went out and bought insurance (not just signed the renewal slip!). Because it's still the case that 2 of the biggest barriers to buying insurance is product complexity and inconsistency of terms, aka, jargon.

Getting a simple, apples for apples comparison is damn near impossible for Joe consumer. And regulators have done little to help consumers navigate this maze. The price comparison sites haven’t solved this well enough either, nor have the digital brokers. The space is open for InsurTech to use sophisticated meta search, APIs and algorithms to provide consumers with simplified comparisons tailored to their needs. This is why I see the emergence of the digital introducer as the space to watch. (BTW, I don’t see the digital insurance wallet taking off, not until a better customer proposition is put forward!)

One’s to watch; Emerge and GoBear

#10 Speed to Pay will become key measure in claims settlement KPIs

At the end of the day, insurance is all about "the claim". That's all the customer cares about.

Tech enabled claims handling will increasingly become automated and self-serve in the hands of the customer. This addresses the unintended consequences of insurer’s efforts to contain costs and fight the fight against fraud. Up until now, insurers have built inefficiency, bureaucracy and layers of cost into their workflows. These impede customer service (from the customer’s perspective).

InsurTech digital claims management platforms, videotech and self-serve claims solutions offer insurers a way to start again. Putting the customer first and in control, claims handling will shift to being a process based on speed to pay. Fraud will always be there and tech can prevent much of it. But the shift to speed to paywill benefit both insurers and customers in the long run.

For more on this, go here for article on 360Globalnet and here article on Sightcall and here for article on Claimable.

The full article was first published on The Digital Insurer on 30th December 2016. The author, Rick Huckstep, is an InsurTech thought leader, public speaker and Chairman, The Digital Insurer.