Lighthouse #2
Curating the best insurance, insurtech, innovation and leadership content for you.
Ron Arnold
11eight | Linkedin | twitter
Creativity is intelligence having fun!
Albert Einstein
Thought Leadership and Innovation
Elon Musk’s Six Secrets to Business Success: Some super simple yet very incisive tips from Elon Musk on how to be successful in business. One of his tips is to “think big” and I love this quote – “If you are bold, and go for a really breakthrough improvement, and it doesn't work, you're definitely going to get fired,…. this is why most companies focus on making small improvements to their existing products rather than daring to imagine completely new ones.” Read More
AI Ethics thinking dominated by the West - that’s a problem!: AI ethics is hot topic across the globe. Academics, governments, institutes, not for profits and business are examining and proposing guidelines to aid and support the ethical use of AI. This article makes the very interesting point that much of this thinking is dominated by the West. Western thanking will carry bias when matched against other cultures. It argues ethics founded in other cultures/religions must be part of the thinking – after all digital and many forms of AI are, and will, be global. Read More
Shackling the Tech Giants: For some time Governments across the globe have been grappling with whether and how to regulate tech giants - the likes of google, Amazon, Facebook and Apple. Significant new rules are now proposed in Europe with two new pieces of legislation: a Digital Services Act and a Digital Markets Act. The Digital Services Act would force the tech giants to take responsibility for the content they carry, imposing a duty of care on them, forcing them to moderate their content and to be more transparent with users. Timely, in the context of recent developments in the US. The Digital Markets Act covers anti-competitive behaviors and would ban some behaviors by what the EU described as “gate-keepers” who would be prohibited from linking access to one of its services to purchases of another or giving preferential treatment to their own services or products over competitors. It would force price transparency for advertisers and impose data portability for users. These are very important developments and certainly make it more difficult for big tech to drive into financial services. Find out more
An important tale for all leaders and innovators: You just never know where disruption will come from. Who would of thought that an online business selling books might eventually become one of the biggest delivery companies in the world. “Amazon is now likely to be a larger supply chain provider than either FedEx or UPS in just a few years, with the potential to launch as an independent carrier in the US - and then perhaps globally. Given the data it owns and its proven record of delivering a customer-centric service at scale, Amazon would be a highly credible competitor to existing logistics companies." Be mindful of your toxic assumptions and realise disruption often comes from another market where someone is doing some part of your value chain way better than you are! See article
Fintech going mainstream: Some very interesting fintech trends picked up in this McKinsey study. Legacy businesses ignore them at your peril!
1. Forty percent of US financial decision makers say they have a fintech account
2. All fintech types—payment, investments, lending, and overall banking—have grown since the crisis began
3. The young use fintech the most, but older generations are joining them in larger numbers including baby boomers
4. Younger users tend to use multiple accounts, whereas older generations are more likely to use one
5. Decision makers in all income brackets opened new fintech accounts throughout the crisis
6. Traditional banks and fintechs have similar levels of customer trust
Insurance
UK Financial Conduct Authority proposes ban “price walking” - certain renewal pricing practices: The UK Financial Conduct Authority (FCA) has proposed insurers would be banned from pricing practices that disadvantage renewal customers compared to first-time purchasers. This is a practice used by many insurers globally. The proposed rules would require that a customer renewing their home or motor insurance pays no more than they would if they were new to the provider through the same sales channel. Firms would be prevented from gradually increasing the renewals to consumers over time, in a practice known as “price walking”, other than in line with changes in risk. Be fascinating to see what the reaction of local Australian insurers would be to this proposal. See article
Subscription models another competitive vector for motor insurers: Volvo launches full subscription model covering the car, servicing, tyres, mobile data, insurance. Tesla looks to be moving in this direction as do the likes of Daimler Benz. The insurance dimension is fascinating. We are likely to see highly customised pricing and underwriting enabled by connected car tech. Certainly, manufacturers and their partner insurers will be in a very powerful pricing and underwriting position to identify and keep the best risks! Read more
Proposed affordability recommendations will trouble insurers: ACCC has just released its 592 page report into Insurance in Northern Australia - 28 December an odd time to release a report! Anyway, stacks of findings & recommendations. Some recommendations that should have insurers worried, including: Review and mandate standard cover; National home insurance comparison website; Extend the ban on conflicted remuneration to insurance brokers.
Under pressure: Profitability for Australian insurers has plummeted over the past year. Historically, they have targeted a return on equity (ROE) of about 15%. In 2018/19, it was 13%. Finity’s latest industry Optima report shows last financial year it dropped to 4%. It hasn’t been that low for almost two decades. Bushfires, floods – natural disasters generally – and COVID have all had an impact. Investment returns have also been hit and the future investment return profile looks patchy. Cash is yielding not much – 1%! An interesting challenge for insurers. Will be very interesting to see how the portfolio, pricing, expense strategies emerge – who will go for returns, who will go for growth, can they be balanced? Is this another opportunity for the challengers to grow share? How will community concerns about affordability impact insurer pricing/underwriting responses?
Insurtech
Lemonade hits 1 million active users: About 1,500 days after its initial launch, some 15-45 years faster than industry leaders such as State Farm, Allstate, GEICO, and USAA Lemonade has hit 1m active users. Impressive! The Lemonade journey has been a fascinating one. Many long term insurers have dismissed the Lemonade story and see it as unsustainable and hype driven. Certainly, there are still some hard yards ahead for Lemonade. I for one hope Lemonade is successful as it “unsettles” traditional thinking and explores new ways to deliver insurance to consumers. See article
Top Insurtech deals of 2020: So what where they: Next Insurance $250m;
Oscar $225m; Unqork $207m; Hippo $150m; Pie Insurance $127m; Bought by Many $105m; Policygenius $100m. See article
Guaranteeing AI performance: Fascinating new insurance product by MunichRe - aiSure. Insurance to guarantee the performance of AI used by corporates or start-ups. "aiSure™ is an insurance product for AI providers who wish to offer insurance-backed performance guarantees. The guarantees assure users that your AI service will perform as promised or provide compensation in the event that it doesn’t. I am keen to see the underwriting, pricing and coverage for this product.
KPMG Australia’s latest Fintech Landscape Australia 2020 update: Fintech numbers up from 639 to 733 over past year. See the Update. Some key findings:
1. Increase of fintechs within the lending category supported by new players in both consumer and SME lending sub-sectors, as well as an increase in Buy-Now-Pay-Later providers
2. Growth in blockchain and cryptocurrency associated fintechs matches the general support & interest in the technology asset class across the past year.
3. Evolution of the neobank sector, even though a number of neobanks have been impacted by delays to APRA’s licensing process
4. Insurtech maintaining momentum
2021 Predictions: It is that time of year when people do their predictions. These two are worth reading:
Sabine VanderLinden - 2021 Predictions Insurtech and Beyond
Nigel Walsh - 2021 we can't wait to join you! (so long 2020!)
#Diversity
#startup ecosystem diversity is a problem. Women get less than 3% of #vcfunding globally, yet they typically outperform their male counterparts (BCG). Access to capital, training to help build new skills & access to networks of power are key challenges. Here I share the stories of inspirational women in the start-up ecosystem and important educational pieces.
What it means to be a “male ally”: Thought leader Michelle Redfern recently asked me and several other men some very simple, practical questions on being a 'male ally'. She has pulled the perspectives together in this post. Please read it and have a think about what small, or big things, you can do in 2021 to make a difference to gender equality - in the workplace, in sport; everywhere! Read here
Of all US start-ups floated since 1817, only 20 were helmed by women:
Eighteen of those IPOs were in just the past seven years. Women who do reach the top still hit a ceiling. They get stuck as COOs – the No. 2s. Read more
Telehealth | Coviu | Dr Silvia Pfeiffer: Coviu is a telehealth software solution helping healthcare service providers - from doctors to medical specialists and psychologists to dieticians and every hospital - with another avenue to care for patients. The potential target market is big with approx. 380,000 clinicians in Australia and 5.6m clinicians in the USA. See article
Subscribe
Lighthouse by 11eight is proudly supported by
11eight is a specialist consulting firm helping Corporates get better results from their innovation and helping start-ups get ready to work with Corporates. Please sign up to our Newsletter and you can contact us here.
