A few views taken from the InsureTech Connect event
With over $4.8 trillion annual net premiums in global insurance and $2.65 billion invested in insurance tech startups in 2015, InsureTech Connect hosted its first event in Las Vegas with over 1,500 participants. This is a smaller crowd than at similar fintech events, but the interest in attending this event was very high. Participants continued to build the dialogue between challengers and incumbents.
Below we have picked a few highlights of the event illustrating the changes in the industry already here and ones to come.
Technology will be used everywhere
The use of technology is changing the way insurance prevents an event to occur or triggers the insurance payment automatically. In this first case we have heard in several panels that using technology to prevent an event will lower the cost of the insurance for the client. For instance, the auto insurance industry is already proposing tracking devices installed in the cars which track the insured driving habits. In the same way, insurances are looking to install tracking devices in homes. For instance, if there is a heating failure, the insurance could dispatch a heating professional to the home before the water pipes burst due to frost.
The second use of technology came from John Bi, CFO of Zhong An, China’s first online-only insurer. Zhong An has an app one can install on a smart phone. The app recognizes a broken screen and automatically requests payment under the policy.
Customer experience is key
The only time the customer interacts with the insurance provider or the insurance agent or brokers is when purchasing the policy or in the event of a casualty. So customer experience has to be excellent as it has been demonstrated that clients change providers based on bad experience. In addition, consumer experience is even more important today with millennials who will chose to leave if they don’t get quick results and a good experience.
Lemonade, a new way to provide insurance
One very interesting moment during the event was a dialogue with Daniel Schreiber, co-founder and CEO of Lemonade, a property and casualty insurance provider which had just opened its doors for business 9 months after their launch and receiving regulatory approval from the New York regulator a few weeks earlier. Instead of teaming up with an insurance company, Lemonade decided to build an entire new company from the ground up and changing the insurance operating model. The client can purchase a policy through his/her mobile device, quickening the process which can take days or weeks. It also decreases the cost of issuance of such policy to a fraction of legacy insurance costs. Lemonade has also taken a page of the sharing economy book. From the premium paid, Lemonade will take a 20% fee for its services, pay the reinsurer and donate the excess fees at the end of the policy period to the charity of the client’s choice. This new model builds trust with the client and minimizes fraudulent claims, as deception would not affect the insurer, but the cause chosen by the client.
When asked why Lemonade chose New York to start their business, Daniel said that they went the difficult route with a challenging regulator and got all the issues ironed out. They hope that that effort will pay off in expediting future approvals in other states.
There is an App for that
Insurance companies are still plagued with legacy IT system. In our panel “Lessons from the App Economy” explored the difference between continuing to build out a legacy system and attaching app elements to the system. Claimatic has a product which uses SaaS plug-in technology that integrates with the insurance company’s existing claims management IT system. The panel and the audience came to the conclusion that with so many insurtech companies proposing close to turnkey solutions and providing quick customization, legacy insurance companies should seriously look at the offered app options. That idea was reflected by Guillaume Cabrère, CEO of AXA Lab Silicon Valley telling the audience that they are constantly looking for great idea to integrate into their business.
After two very full days of panels and networking, we saw an insurtech industry thriving and legacy insurance companies very keen in understanding and embracing the new technologies. It may take some time as the insurance industry is lagging behind the banking industry when it comes to innovation, but it is catching up rapidly with exciting cutting edge solutions.