On the tides of insurance innovation

  A person has three choices in life. You can swim against the tide and get exhausted, or you can tread water and let the tide sweep you away, or you can swim with the tide, and let it take you where it wants you to go.  source Clever words for one’s life path, perhaps […]

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Always something new to learn under the insurance sun

TLDR     For the common good the policyholders will corporate with each other. The contribution of the policyholders is considered donations. To help those who need assistance, all their policyholders will pay their share. The liabilities are shared according to the pooling system of the community and losses are divided. According to compensation and subscription, […]

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Just in Time insurance- only what you need, when you need it

  Image TLDR   It wasn’t that long ago that production and retail inventories were gauged by the space available in which to store the supplies/goods.  Then some smart people determined that in a well-managed, lean operation inventory could be obtained upon instant need, and thus Just in Time (JIT) Inventory principles were developed. Is the […]

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Contents Cover- the under-served aspect of property insurance innovation

image TLDR  Consider: Structure losses– estimated to the nearest square foot or square meter.  Plenty of automated tools and techniques, and plenty of auditing for consistency. Contents losses– manual assessment and data entry.  Some automated tools for high value, niche cover or pre-inventory.  Little consistency in estimation as there is little consistency in what’s being […]

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InsurTech Topics and Cascading Consequences

image TLDR   “If you wait by the river long enough, the body of your next article will float by.” (apologies, Sun Tzu) ” My colleague and friend, Thomas Verduzco-Weisel asked me recently about articles I write, “Do you keep a topic list or inspirational thought list?” I wish I was that organized and purposeful.  My […]

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InsurTech is growing up, and cyber crime is too

Image TLDR   Don’t look now but the self-declared insurance disruptive force called InsurTech is maturing.  There, I’ve said it. And cyber crime issues need to become mainstream discussions.  There, I’ve said that, too.   Here are some compelling InsurTech maturity indicators seen in the media this week: Publication of articles discussing more mainstream concerns for […]

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InsurTech is still looking for traction with customers and companies’ staff

image   TLDR   Are the InsurTech advocates/enthusiasts ‘preaching to the choir’ and considering that to be conversion of the masses?   Within the orb of InsurTech press, social media, and conferences one would think innovation and migration to adoption of the most clever of tech and innovative practices is de rigueur within insurance- if one […]

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Have the horse before the cart- problem first, then innovation solution

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TLDR Insurance is not complicated, say compared to sending a man to land on the moon, but it’s big, and its current challenges are like finding the proverbial needle in the haystack.  Innovation, digitization, virtual sales and service, and so on.  Not unlike the elephant in the fable, insurance is perceived differently by each beholder- is it tail, ear, leg, trunk, sales, or underwriting, claims, accounting, actuarial, or customers?  What is to be innovated?

The drum beat of innovation is in some part fashion, but a large part reality- insurers need to evolve with their customers.  But there’s the rub- what evolution is meaningful, useful, profitable, doable, and able to be integrated into a carrier’s strategy, tactics, and admin superstructure?

This week’s discussion- who is useful to consult when you want to do it, or how to tackle it, innovation idea-wise.

I had a very useful conversation this week with an insurance veteran, Joël Bassani, founder and consultant at jinnbee who is now looking to share his knowledge gained over years with the insurance industry.  Our discussion reminded me that there are many aspects to insurance, many lines, covers, regulations, regions, etc. that one must deal with in the globally interconnected insurance world.  And how does one determine what path to take from that which one is on to one that leverages innovation or change?

What Joël told me as a foundational message resonates well- it’s not necessarily knowing the tech to apply, but it’s knowing what problem you have and working from that to what innovation has to help you.  In his opus of an InsurTech study, Joël notes early on, “An InsurTech is a solution, you need to focus on your Problem!”

And how do you know your problem?  Simple- you ask your customers, both external and internal and you strive to #innovatefromthecustomerbackwards .

What jinnbee has compiled for the industry is a compendium of InsurTech purposes:

You have an insurance problem, jinnbee’s analysis can help find an InsurTech solution from organizations that exist, are experts in their fields, and are available.  So you don’t have to create the wheel, you simply need to know the makeup of the wheel and jinnbee will help find a fit.  Do you make the innovation in house, or connect with an InsurTech?  Jinnbee will help lead your decision matrix.

And as comprehensive a study as jinnbee has produced, there are other organizations who have blazed a trail in terms of aggregating InsurTech organizational data, firms’ purposes, an ability to play ‘matchmaker’, and in providing accessible data. The two most prominent examples are Coverager, and Insurance Thought Leadership .

Coverager

I asked Coverage founder Shefi Ben-Hutta what synopsizes Coverager’s business model, what is the ‘elevator pitch’ that would best describe her firm’s approach:

  • Focus on tech, strategy, and alternative insurance distribution
  • Create and curate coverage (news, not lines of insurance)
  • Address the needs of insurance professionals, those who need access to information regarding how to address their unique problems (sound familiar?)

If the reader has yet to access the Coverage website (or better yet, subscribe to Coverager’s daily email), rest assured you will not be disappointed by a simple blast of information.  Coverager approaches information sharing with a wry tongue in cheek, occasional snark, but always best in class, topical information.  The firm’s web splash page gives an indication of the depth of coverage and information:

Everything from an encyclopedic source of insurance company information, a searchable database of InsurTechs, hosting of industry events, and to the latest marketing scheme or the scoop on a company that has gone off path.  As Shefi recounted, their purpose is:

  • Learn from the past
  • Understand the present
  • Better bet on the future.

Insurance Though Leadership

Take Coverager’s avant-garde approach to InsurTech assistance and look to a somewhat organizational opposite, and one finds Insurance Thought Leadership (ITL).  ITL approaches InsurTech advisory services with more of a formal suit, but with no less breadth of information as Coverager.  ITL has developed through the efforts of its founder, Dave Dias  into a premier source of innovation source/need connections, and a premier host of innovation education.  And the firm is the home of the man with a knowledgeable grasp on the innovation world, Guy Fraker, AKA the man with a thousand sneakers (runners, athletic shoes).  Insurance company C-Suites are encouraged to subscribe to the matchmaking service, and the organization’s excellent editorial staff keeps the industry appraised of the latest concepts.  A look at the Innovator’s Edge page of ITL website provides the searcher an idea of what the firm can offer:

Three very good sources to search and consider, and there are other InsurTech informational resources, e.g., GR Capital’s recent summary article, Why Next Year Can Be a Turning Point for Global Insurance Innovation, and industry influencers who can make connections from personal experience, including those in this list, or this one, or even this one (companies).

 

But it still requires the asker to know what innovation problem needs to be solved, what the customers are expecting (maybe it’s no change?), and how efforts are to be focused.  Innovation is not fashion, it’s strategic application of resources and there are good resources at hand.  And in most cases it’s not part of the elephant, but consideration of the whole beast.

 

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).

 

 

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InsurTech and Innovation news- a great banquet but fill your plate wisely

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TLDR   The volume and variety of insurance/InsurTech news is almost too much to keep track of, even if one tries to keep focus on one insurance line, one region, one company, legacy vs. innovation, etc.  And of course, I like to keep up with all.  Foolishly, because a jack of all trades remains a master of none, even in the digitally aware environment. 

In any case here’s a sampling of what caught my attention during the past week:

Auto telematics help inform driving decisions for the elderly (and maybe create a sales opportunity for scooter sales  What was rolled out originally as an app to measure driving habits for taxis and fleets by Orix Auto Corp evolved into a clever tool for the elderly and their families to broach the subject of safe driving, and whether a person has requisite driving skills.  In turn, many who choose to surrender their auto driving rights have found a measure of freedom using motorized wheelchairs or scooters, e.g., devices rented by Whill, Inc.    Japan Today   Thanks, Robert Collins

InsurTech builds a market for a complementary product.

Equipment breakdown claims grow in a booming economy

“Equipment breakdown now rivals fire loss in both frequency and severity of claims, driven by the booming economy and human influence, according to an FM Global analysis of large property-related losses greater than $3 million released Tuesday.”

Sure, it’s one firm, but what??? Rivals fire losses for frequency and severity???

“Lack of maintenance was a factor in two-thirds of equipment breakdown losses in 2018, while nearly half had a significant human element impact or influence, FM Global said.”

InsurTech opportunity– IoT devices to monitor equipment performance, maintenance, automated repair, and controlled shut down.  Keep in mind equipment failure equates directly to loss of use and profitability issues.  This speaks to changes in underwriting, policy forms/exclusions, changes in indemnity paired with parametric for a new sort of indexed parameter.   Business Insurance

AIG unit off the hook for non-property damage arising from flood

“A flood sublimit in a property policy applied to all losses arising out of a flood, not just property damage, a federal appeals court ruled, reversing a lower court’s ruling against an American International Group Inc. unit.”

An AIG insured filed suit for loss of use (time element) claims, a contention the appeal court said was unfounded as the policy sublimit was deemed to include all claimed losses, not just direct property losses.  Policy provision/endorsement wording and existing case law- insureds need to understand and/or ensure their broker does.  While this is an insurance ‘due diligence’ issue that is not new, this is another innovation opportunity- policy language/unstructured data analysis.  Chris Cheatham of RiskGenius has done yeoman’s work in providing a service to allow companies to “better understand policy language and create more efficient underwriting workflows,” but that does not force a company to understand what coverage applies.  Business Insurance

InsurTech opportunity- automated learning from denials of coverage– this flows both from the insured to the carrier, and vice versa.  Same principle applies to analysis of litigation- learnings for all.

Which P&C Insurers Made the 2019 Fortune 500?

Let’s not consider the 500, let’s consider the top 100 companies on the list, of which 7 are P&C insurers.  Why care for this article?  Well, the seven firms represent $535 Bn in annual revenues, and employ in total 658,000 insurance professionals (not including those populating tens of thousands of agencies).  That’s a lot of financial clout, and 658K pros (estimated one million with all carriers included)?  Innovation opportunity– Think what the input from an informed constituency of that size could contribute to insurance innovation and the industry’s future but are in whole discouraged from doing so. (roll this up to the global top ten- $917 Bn capitalization, hundreds of thousands of staff)

Unleash the innovation Kraken, P&C industry, free the staff! – the only real problem that would be had will be what to do with all the great ideas.  PropertyCasualty360

GetSafe CEO Predicts Lemonade Will ‘Struggle’ In Germany

“Lemonade will have to struggle in Germany,” GetSafe co-founder and CEO Christian Wiens told Carrier Management vie email. “The market is regulated and complex, and the domestic InsurTechs are in no way inferior compared with Lemonade.”

“While Lemonade is a fantastic storyteller, they concentrated on their brand and not so much on their product and technology,” Wiens said. “Germans, on the other hand, prefer to do it the other way around.”

First sentence- seems the industry cognati agree- plenty of DE innovators already in play across all covers.

Second sentence- not so sure.  Lemonade has been a mostly transparent sharer of the principles behind its policy form, and certainly speaks a lot of its favorite bot, Maya.  GetSafe is no technological slouch as its easy app and MGA-based operation has brought together backing (Munich Re) and leverage of changing customer needs in its property insurance platform.

InsurTech opportunity- harken back to business school– what are your market threats, and who is manifesting a potential competitor’s novelty, and can you iterate more effectively based on what new entrants are bringing to your base?  Lemonade’s substantial financial backing can help them bring a ‘square peg’ to a DE ‘round hole’, so why not shamelessly and fashionably imitate?  Don’t denigrate the disruptor of the disruptors- re-disrupt (is that a word?)   Carrier Management

Plenty to see here, as they say, but don’t rest too long on one news feed- too much of one good thing could cause info-indigestion.

Best approaches I have found- watch what your respected connections watch and watch what smart persons in tangential industries watch- there are bound to be meaningful overlaps.  Don’t limit yourself to one region’s news, don’t limit yourself to one line of thought.  Read the contrarian’s point of view.  And understand that the next best thought may come from an unexpected source/country/post/medium/neophyte/expert/anything.

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).

 

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A Declaration of Innovation- Happy 4th of July

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“When in the Course of financial operations it becomes necessary for people to disrupt the legacy bonds which have connected them with insurance and to assume among the powers of the industry, the separate and equal station to which the technology and innovation entitle them, a decent respect to the opinions of mankind requires that they should declare the cause(s) which impel them to the separation.”

No, Thomas Jefferson and his peers did not declare insurance innovation as a cause in 1776, and his well-known version of the United States Declaration of Independence is far more articulate than the paraphrased paragraph noted above.  But it’s July 4th, the U.S. Independence Day, and it seemed fitting to have a topic that tips its tricorn hat to the day.

It’s easy to declare a need for separation from the bonds of a multi trillion-dollar legacy industry, but as with any long-standing governance or tradition the declaring is much easier to accomplish than the doing.

Insurance innovation is a heavy lift of a heavy industry.  Insurance is many things, many covers, many types of service, many jurisdictions, many carriers, and of course- billions of customers.  As the Insurance Elephant has previously noted in “The Blind Men and the Elephant, InsurTech and its Many Perspectives” , insurance innovation is comprised of many disparate parts that make the whole beast, yet each person who has motive to adopt a ‘separate and equal insurance station’ perceives the beast as the activity in which the respective ‘each’ is involved.

The industry functions and provides the foundation upon which ownership and finance can rely, yet in its entirety the industry is held captive by the tyranny of technical, organizational and process fealty.  Process inertia and associated data management are ingrained within every aspect of the insurance system with which all are required to comply, and innovation must expend valuable energy in convincing incumbent management hierarchies of its worth.

And there are plenty of data that need to be processed- one by one, by ten, by one hundred, by one thousand, million, billion, trillion forms.  The industry employs millions globally to handle the volume of paperwork/data/forms.  Customers (for the most part), vendors, providers, service persons, agencies, and regulators are accustomed to the paper chase- but will that ensure an enduring, effective industry going forward?

These truths are self-evident- insurance must free itself from the shackles of legacy complacency.

There are many ‘patriots’ resisting the tyranny- companies that have developed clever methods to structure data that exists in native unstructured form, e.g. ExB Labs whose Cognitive Workbench can “search texts and images for content,…also classify, interpret, summarize and evaluate” unstructured data.  Or RhinoDox, whose document management innovations make captured, unstructured data easier to find and use (yes, it’s clear that for now that firm’s focus is on manufacturing innovation, but their heart remains available for insurers).  And insurance process management platforms that have developed-  These are, however, just tools to mitigate the overburden of legacy systems, not the inertia-busting change that is suggested for the long-term health of the industry and its participants.

Consider- there are a whole lot of persons employed in the legacy insurance industry, persons who understand what customers need, how processes function (or don’t), how to workaround systems that are obsolete, ensure customers have the appropriate cover, adjust claims within a patchwork of old and new systems, are subject to operating priorities that vary by the quarter, and are witness to the loss of intellectual capital due to attrition and retirement of tenured colleagues.

Yet despite those self-evident factors these millions are not encouraged to participate in the active dialog of innovation and InsurTech.  Not only is that wealth of staff knowledge generally unavailable, outside of participation in conferences most of those who are putative industry leaders are reluctant to be or missing in the discourse.  The drum beat of innovation is heard in the town square but remains surprisingly mute in many parts of the industry.  In the absence of the light of discourse, the tyranny of legacy insurance prevails!

As with established global governance two hundred and forty some years ago and the onset of the nascent United States, there is optimism for change.  Perhaps it is time to examine if the current indemnity model that exists for many covers has been outpaced by data availability and alternate means of claim reimbursement, e.g., modified parametric plans.  There are plenty of vested interests holding indemnity contracts near, but is a rebellion in the offing?

There are markets that have avoided the need to innovate- those are the digital native markets such as China, or India, or South America, where insurance products have taken hold for hundreds of millions of customers by working from innovation backwards- what does the product need to be to serve the delivery channel the customers expect.  There are niche customer segments that have been found and are being served by new products and new players, but these unique markets are an insignificant (statistically speaking) part of the whole.

So let’s talk about the incumbent markets that have the technical, organizational, and process debt that innovation has yet figured out how to amortize, but that is fodder for a declaration of insurance innovation independence.  A need to cast off the yoke of what has been and find the what can be.

A very heavy lift, indeed.

A Happy Fourth of July to my U.S. colleagues.  And apologies to Thomas Jefferson, et al.

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).