The Seven I’s of Insurtech Connect 2017

On the 3–4 October 2017 I attended the world’s largest Insurtech Conference, Insurtech Connect in Las Vegas. This year the conference was attended by over 3,500 people from around the world all talking about insurance, innovation and technology.

Insurtech has gone beyond the buzzword and is now a force driving change in the insurance industry on a global scale.

It was great to see an industry so often ignored by the business and technology world, to feel excitement often only reserved for startup or tech conferences. Now, I can’t say it reached the hype of the new iPhone release, but it has certainly come along way since the boxy suits and square tie days (and yes mostly male). Insurtech has gone beyond the buzzword and is now a force driving change in the insurance industry on a global scale.

I was fortunate to have represented InsurtechAustralia and join CEO and Co-Founder of Cover Genius, Chris Bayley on the trip. We also participated in the Insurtech Education Tour organised by Eoghan Trehy and the team at Macquarie Bank. As a partner of insurtechAustralia, congratulations to Eoghan Trehy and Macquarie Bank for taking a lead in supporting and educating the Australian market about insurtech.

It was a privilege to share the experience with fellow Australian and New Zealand insurtech startups and senior leaders of the Australian insurance and broking community including Steadfast, Austbrokers Group, NIBA, AEI and many more. I know we have all come back with lots of learnings and now, lots to do.

Oliver Wyman Presenting on predictions

A witness to tragedy

It cannot be ignored that the lead up the conference was marred by an absolute horrifying and tragic event, to which we all witnessed. Standing in the event casino that evening and to see absolute horror and terror on people’s faces as we all ran in panic out of the casino will not be forgotten. And then over the proceeding hours, to be fearful of what was happening and then learn about the terrible acts was deeply saddening. I can only say that we were very lucky to have been away from the actual event and be able return home to our families.

There are no silver linings in tragic events such as what happened in Las Vegas.

As an Australian, I am thankful no Australian citizens were injured or killed. But as a human, I cannot but deeply empathise enough for those who passed, those that were injured and those families that are grieving tremendously at this time. These incidents just should not happen, ever. I truly hope that the American Government learn yet again from these events and respond. Please respond as our Government did in 1997. There is no silver lining in events such as these.

The 7 I’s of Insurtech Connect

Now, normally after these type of conferences I do a key lessons or takeaways piece. But this time I thought, hey let’s do something different. So instead, I thought I’d write a different type of list. Given the topic of the event, I picked the top words said beginning with “I” (not including insurtech of course). So here it goes:

Innovation

This one had to be first. When I entered the insurance industry back in 2015, I often joked that the only time that insurance and innovation has met previously, was in the dictionary. But since then, and especially after this week, I can say that I have been proven wrong. Innovation is alive and well in the insurance industry today, right across the value chain. Especially in Australia when compared to other markets.

Innovation is alive and well in the insurance industry today, right across the value chain

Each session saw people presenting and discussing about how to change the insurance industry. And, importantly how to change it for the better. From new products, faster processes, better ways to underwrite, speed up claims, to changing culture and how technology can enable that the change. Positively, there was a strong alignment that innovation needed to be done for a purpose. And that is the continued protection of people, businesses, assets and communities. Especially given the events that occurred on that Sunday.

Insurance (and the insurer)

An obvious one yes. But, this is more about who was represented in full force at the conference and who is leading the charge. Importantly, Insurtech is not something that is “being done” to the insurance industry. In fact, senior leaders and representatives of all major carriers were there in force, and made up the largest participants in the conference. This is often different to other technology conferences where it is attended only by those looking to “disrupt” the industry.

The insurer is certainly part of the insurtech trend. We see that in the opportunities for insurtech startups to partner with incumbent insurers and underwriters, to help to get to market. As we know, establishing a full stack insurer is difficult for new market entrants. Therefore, the modular nature of the insurance industry today, places insurers (and perhaps reinsurers?) in a wonderful position to leverage their own data and balance sheets and to bring new technology to market quicker.

In addition, there were discussions about new insurance products to help protect new risks or to protect existing risks better. Cyber was a top product discussed, together with insurable risks arising from the sharing economy, autonomous cars and the needs of the millennial generation. In this instance however, there were criticisms of the speed in which these products were taking to get to market.

There is a real opportunity for some forward thinking insurers to support new product development, much much quicker.

(Re)insurer

Now this one is cheating a bit, but couldn’t be ignored. At the launch of the TAS Insurance industry report I commented that I thought the “reinsurer is coming”. And I was proven correct.

Re-insurers like MunichRe and SwissRe have been leading the charge in investments and re-insurance for some the largest insurtechs in the market to date. With billions of investment made into insurtech’s alongside capacity, it seems re-insurers are really standing up and supporting some of the big insurtech plays.

Integration

Insurance is a truly an ancillary product. In it’s very nature, it is meant to cover the risk of an event happening to us, or something important to us. That means, the opportunity to insure arises alongside a purchase transaction. In an age of digital and e-commerce, integration of insurance products into the purchase transaction in order to provide a more convenient experience for the customer is huge opportunity for growth.

This can be even taken a step further with deep integration already being seen in purchases like Tesla, in which insurance is already integrated into the purchase and core asset. I expect to see insurers become “API Ready” and enable new technologies to easily integrate with their core systems to make the insurance process much much easier. Those that don’t will certainly get left behind.

Integration can also be seen at a deeper level in the trend of usage based insurance products using telematic devices. Businesses like MetroMile are providing insurance products that integrate with our lives and increase and decrease depending on how we consume them. I expect to see this as a continuing trend for insurtech in the coming year as the conference was well represented by these types of devices.

Incidental

Incidental products were certainly a key trend. As many of the major insurance products turn to commodity based pricing (certainly not intended of course), new entrants without the mega marketing budgets to go after these business lines are going after incidental lines instead.

This is particularly relevant with the ability to integrate into other e-commerce transactions (see above) or for product lines that are not front of mind for the larger carriers. For example, one of the fastest growing global insurtechs globally is Australian-based Cover Genius who have quickly become the largest Worldwide distributor of car rental insurance under their B2B2C brand, RentalCover.com, and who are adding other lines of insurance to their end-to-end distribution capabilities.

Further, the likes of Trov targeting on demand single asset protection, Lemonade going after specific lines like Rental Insurance and new market entrants like Slice and Next Insurance targeting the sharing and gig-economies. Each of these incidental products seek to carve out ‘niche’ insurance lines which then provide opportunities to move upmarket into more commodity insurance products.

I expect to see more coverage for niche lines coming from new market entrants over the next year. That being said, with new products come additional risks and potential for huge claims losses. Whether these products are sustainable over the long term, or growth capital can be used to cover claims losses over the shorter term, is yet to be determined at scale. The success of which will certainly validate or invalidate some of the huge valuations seen today for some of the loss making insurtech ventures.

Investment

The VC’s were out in full force in the conference this year. With an afternoon of office hours with VC’s and all big names in attendance, insurtech is seeing some large cheques being written as the VC’s seek new portfolios for growth and fintech cools a little. Since 2015, the heating up of insurtech was certainly spurred by huge insurtech deals like Zenefits, Oscar and ZhongAn but also plenty of other reasonable investments flowing to growing insurtech’s too like Coverhound.

In addition, the traditional VC’s aren’t alone, with most of the major carriers establishing Corporate Venture Capital arms to take advantage of both financial and strategic opportunities in the market. Today there is about 15 Insurer/Reinsurer CVC’s, which provides insurtechs looking for investment an even greater market for obtaining capital.

That being said, the US market is certainly the preferred jurisdiction for VC investment, with New York, San Fran and Austin preferred locations. So if you are an insurtech outside these locations, expect to see some lower valuations coming your way. If this is the case, the strategic CVC’s might be a good play, but be careful of the potentially long long deal cycles.

Insight

There was a lot of discussion about how insurers can utilise their mounds of customer data. Positively, the term ‘big data’ was not used often. Instead, it was about how to turn the ever increasing amount of data into insights for the customer.

This was about the ability for insurers to no longer present insurance opportunities in the typical broad segmented way, but instead to be able to go deeper and personalise. The ability to understand the consumer at a personal level in order to deliver insights for better pricing and product recommendations, at the time that is relevant for the consumer.

Insurtechs that leverage the latest technology and integrate it into their customers lives/businesses using tools such as IOT, wearables, mobile or effective customer engagement strategies will certainly get ahead in this race — to turn data into actionable insights.

Summary

After such a difficult week of highs and lows it is difficult to not come home still in shock about what happened in Vegas on that Sunday evening. That being said, being surrounded by a wonderful group of fellow Australians in tough times make you feel grateful for what we have at home. My thoughts and sympathies goes out to all the people and families.

Despite this, the conference was a great success by all accounts and I look forward to getting stuck into working with Australian insurers, brokers, reinsurers and insurtechs on how to further technology and insurance innovation over the coming year in Australia.

As the launch of insurtechAustralia approaches this month on the 26th October, we also look forward to playing a pivotal role in the establishment of the insurtech community in Australia together with our members, founding and general partners. If you want to find out more about insurtechAustralia, please get in touch or check out our website.

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