Lighthouse #7
Curating the best insurance, insurtech, innovation and leadership content for you.
Ron Arnold
11eight | Linkedin | twitter
If at first the idea is not absurd, then there is no hope for it.
Albert Einstein
Thought Leadership and Innovation
Are You Stuck In The Corporate Innovation Paradox? Great article on innovating in the corporate context. These two quotes sum it up nicely:
"The challenge for innovation in the corporate environment is that it needs to play by a different set of rules. Innovation is never on time, in your budget cycle or easy to manage through the standard gates for planning and approval. The machinations, systems, processes and approval gates inside organisations are designed for manageable, consistent stable growth based on the known risk factors."
"The risk is, and what often happens, is that organisations end up pushing innovation management and delivery into the current structured business project delivery model."
In our work at 11eight with corporates, setting up the "innovation scaffolding" so the operational settings are right is what we spend most time on - it is critical! Understanding how corporates really work is the key to this! Source: The CEO Institute
9 Attributes of Sustainable Business Models: A worthwhile article in assessing whether your business model is truly sustainable by testing it against 9 attributes which fundamentally underpin business advantage. The first 5 attributes apply to many business models independent of their environmental or societal impacts, but it is the addition of attributes 6-9 that forms the core of truly sustainable business models, as they are becoming increasingly important to remaining resilient and extending business advantage in the future. These are the 9 attributes of sustainable business models:
Scales effectively without increasing risks or diminishing returns
Increases differentiation and competitiveness
Reduces the potential for commoditization
Uses network effects to achieve growth and multiply the value
Harnesses business ecosystems for advantage
Remains durable against environmental and societal trends
Creates environmental and societal benefits material to key stakeholders
Increases returns to shareholders and E/S benefits to stakeholders
Animates purpose
Source: BCG
Earn Money From Your On-line Activity: Love this idea. Datacy is a tool that allows individuals to collect their browsing data, manage it, have it anonymized and aggregated with others and then sold. The end-user gets 85% of the resulting revenue, while Datacy takes 15%. Source: Tech Crunch
Insurance
Australian Insurers Take Note of Recent FCA Pricing Reforms: The UK's FCA has implemented a package of remedies to improve competition and protect home and motor insurance customers from loyalty penalties. This includes new rules so that renewal quotes for home and motor insurance consumers are not more expensive than they would be for new customers. This practice is known as price walking, and the FCA considers "It ... distorts the way the market works for everyone. Many firms offer below-cost prices to attract new customers. They also use sophisticated processes to target the best deals at customers who they think will not switch in the future and will therefore pay more."
One would expect this will attract regulator interest in Australia (and NZ), particularly given the most recent raft of "consumer" reforms. It will be interesting to see how this works in practice where risks are priced at the level of the address, individual and the asset. One may need to get under the bonnet of the pricing engine to "see" price walking.
FCA's statement & other materials - worth a read. Source: FCA
Disruption Everywhere – What Should Insurers Focus On: The insurance industry is on the verge of a seismic, tech-driven shift, fuelled by the integration of automation, deep learning, and external data ecosystems. Insurers must understand how these drivers will change business landscape and respond accordingly. New distribution models will emerge, purchasing insurance will get faster...and easier; underwriting will fundamentally change; and while claims processing will likely remain an insurance function, AI and automation will change the way it is done! Here are four areas that McKinsey suggests insurers focus on:
Get smart on AI-related technologies and trends
Develop and begin use of a coherent strategic plan
Create and execute a thorough data strategy
Create the right talent and technology infrastructure
I would add work out how to harness the dynamism, agility and capabilities of early stage businesses. Source: McKinsey
Self Driving Cars Legal By 2021 - UK: Self-driving (autonomous) vehicles are set to be legal on UK roads by the end of the year, the British government has confirmed. The UK’s Department of Transport stated vehicles with automated lane-keeping systems (ALKS) would be the first in the country to be legalised for hands-free driving at speeds up to 60km/h (37mph). Source: Drive
Another Auto Manufacturer Exploring UBI: Ford Motor Company has partnered with Mile Auto offer the insurtech's usage-based insurance to its drivers. Customers who opt in can share their driving data from their car's on-board technology platform to get a policy without any additional hardware or a mobile app. Mile Auto has a similar agreement with Porsche. It is currently available in Arizona, Georgia, Illinois and Oregon. Source: dig-in
Insurers Mindsets Styming Ecosystem Opportunities: Ecosystems and platforms are on the strategic agendas for many insurers. They offer many exciting opportunities from improved customer reach, a more integrated experience and a menu of tasty and relevant offerings. However, shifting from being on the strategic agenda to reality is tough! I like this quote from my colleague Ashish Jhajharia which provides some great insight about insurers and their approach to platform and eco-system opportunities:
"The mistake that insurance players make is that they think themselves to be at the centre of the ecosystem, where as ecosystems have no centre point, even the customers are not at its centre. Instead connecting it and embedding insurance into the ecosystem of the customers should be their approach." Source: Ashish Jhajharia
Insurtech
Cloud Downtime Insurance: As the world goes more and more digital, the nature of the risks faced is changing. And generally speaking the insurance is struggling to keep pace with the emerging risks associated with “digital” and how they might be insured. Parametrix Insurance is a super interesting new proposition that is leaning into the challenge. It offers insurance policies for companies that rely on third-party cloud providers, e-commerce services, payment gateways and CRM systems.Parametrix approaches this problem in three key ways.
It has developed a system that continuously monitors third-party IT services, providing a direct view into service interruptions.
Its pricing model, which uses millions of data points to help customers estimate the financial risk involved with downtime and lets them customize the payout per hour of downtime. The model spits out a premium based on that payout rate.
If an insured downtime event happens, the customer gets compensation immediately, with no claim process and no proof of loss.
Parametrix recently closed US$17.5 million funding round. Source: Tech Crunch
Spilt Lemonade: Here is an interesting Lemonade story which will very likely become a cautionary tale about insurtech, AI and PR....And how it can go wrong! In a Twitter thread Monday that the company later deleted and called “awful,” Lemonade announced that the customer service AI chatbots it uses collect as much as 1,600 data points from a single video of a customer answering 13 questions. “Our AI carefully analyzes these videos for signs of fraud. It can pick up non-verbal cues that traditional insurers can't, since they don’t use a digital claims process,” the company said in a now-deleted tweet.
The thread implied that Lemonade was able to detect whether a person was lying in their video and could thus decline insurance claims if its AI believed a person was lying. AI experts on Twitter immediately mocked and contested the claim, pointing out that the entire premise of so-called "emotion recognition" systems, which claim to detect a person's mood or mental state, is highly suspect. They also raised the well-established point that these systems are inherently biased. Source: InsurTech World
Pay For Your Insurance Trip by Trip in Your Car: Car IQ has developed what it said is the first payment solution developed for vehicles and passenger car fleets that enables the vehicles to transact directly with card networks, banks and service providers. Its underlying technology is based on a patented machine identity verification process that enables vehicles to automatically initiate payments for services such as tolls, fuel, parking and more. So you may even be able to pay for your usage based insurance and rates could vary by driver, route and so on....Perhaps i could also get real time pre-trip offers from different insurers in-car when I punch in the route! Source: pyments.com
Opening a Huddle in NZ: Australian based Open insurance is making good in-roads in New Zealand. In an new partnership, Open is working with Tower Insurance and launching some new motor and home insurance products under the Huddle brand that are said to be innovative - and I expect they will be! What I like about this is that, not dis-similar to Australia, the New Zealand market is dominated by a small number of powerful incumbents. Also, it is great to see the deployment of Open's “insurance-in-a-box” that promises dynamic offerings and solutions. Ultimately, the competition has to be a good thing for consumers. Source: Open Insurance
Comparison Sites May Be About To Unsettle Australian Motor & Home Insurers: This is an important disruptive development for mainstream insurers. Finder has become the first comparison website to gain access to financial product information and consumers’ banking data, under the government’s consumer data right regime. Finder will be able to ask for a consumer’s consent to use their banking data to provide personalised recommendations via the Finder app, a money management tool the website launched in March last year - and reportedly downloaded 122k times! To date comparison sites have struggled to get traction in mainstream motor & home insurance. If the likes of Finder can develop a slick, value add propositions using data to find savings, the fortunes of comparison websites in motor and home insurance may be about change. It will be fascinating to monitor what evolves. Source: Mortgage Business
Planck Changing SME Underwriting: Insurance data analytics platform Planck raises $16 million in a Series B round. Planck’s database, which includes online images, text, videos, reviews and public records, allows it to give insurance providers real-time information that helps them determine premiums, process claims and give SMEs faster quotes. It covers more than 50 business segments, including restaurants, construction, retail and manufacturing, and can deliver analytics by simply entering a business’ name and address. For example, if a healthcare business is seeking to buy or renew an insurance policy, Planck can give underwriters information such as the type of equipment used, what kind of drugs it prescribes and the type of surgeries it performs. Source: Tech Crunch
Lemonade CEO Puts Challenge To Traditional Car Insurers: Lemonade recently announced it is moving into car insurance. Some interesting comments by Schreibe, CEO Lemonade, about the sector:
"There’s going to be massive dislocation in this entire sector...the data implications are profound and they aren’t good for incumbent insurers. All of the pricing of insurance until now has had to look at big groups of people in aggregate...As soon as you can break apart that average … that monolith... and price people using specific data to them, you have a massive advantage that incumbent insurers don’t like"
Morgan Stanley recently advised in a note to investors:
“We expect to see over the near to medium term, with rather few exceptions, that all auto OEMs (not just Tesla) will offer auto insurance services directly to their customers on their connected vehicle platforms."
This will not happen over night. Nonetheless, it is on the way! The scope for global deals (eg Swiss Re, MunichRe, Allianz) rolled out market by market is big! How will the incumbents respond? They are not sitting still. Great to see some "innovation" pressure. In Australia, Tesla has partnered with IAG’s Poncho Insurance. Source: The Driven
#DiversityMatters
#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.
Rita Yates, CEO, Insurtech Australia: Rita is one of the co-founders of Insurtech Australia which is a not for profit bringing together the diverse Australian insurtech community including startups and scaleups, insurers and brokers, innovation hubs, investors and regulators in the knowledge that local connectedness is a key factor in the success of startup ecosystems. She is super passionate about the role insurtech can play in improving insurance outcomes for consumers, business and incumbent insurers. Source: 11eight
11eight is a specialist consulting firm helping Corporates get better results from their innovation and helping start-ups get ready to work with Corporates. While 11eight takes due care with the information contained or implied in this Newsletter, 11eight does not warrant or guarantee its accuracy. Readers should validate the information and 11eight accepts NO responsibility or liability for any actions readers take based on information contained herein. Please sign up to our Newsletter and you can contact us here.
