Lighthouse #6
Curating the best insurance, insurtech, innovation and leadership content for you.
Ron Arnold
11eight | Linkedin | twitter
“No one is perfect - that’s why pencils have erasers.”
Wolfgang Riebe
Thought Leadership and Innovation
Financial Services Under Pressure – JP Morgan CEO Calls it! JP Morgan’s CEO Jamie Dimon’s Letter to shareholders is an excellent must-read. Key points:
· Banks facing fierce competition from multiple vectors
· Banks playing an increasingly smaller role in the financial system
· Tech companies (Amazon, Apple, Facebook, Google) and Walmart are here to stay
· New competitors successfully easing customers’ pain points - making digital platforms extremely easy-to-use, intuitive, with fast & smart products - from loans to payment systems to investing
· Fintech companies around the world are advancing both digital & physical banking products and services - utilising social media, using data smartly & integrating with other platforms rapidly to win significant market share
· Big Tech (Amazon, Apple, Facebook, Google) will all embed payment systems within their eco-systems and create a marketplace of bank products and services
· Growth in shadow & fintech banking calls for level playing field regulation
· AI, the cloud and digital are transforming how we do business
Similar observations apply to insurance. Source: JP Morgan
Corporate Innovation Blockers: Innovation and experimentation are becoming increasingly important capabilities in an increasingly dynamic competitive environment. However, many organisations struggle. Executive surveys highlight disappointment with innovation efforts. Great article covering some of the fallacies/myths that undermine innovation. There are three arguments often directed against change and trying different things (Hirschman). I have heard all of these:
· Perversity thesis - any action taken to improve some aspect of a system will fail, and the organisation will be worse off.
· Futility thesis - any efforts to improve the organisation, will be a waste of time as they won't address the more profound structural challenges.
· Jeopardy thesis - the action, though beneficial, involves unacceptable risk and costs. It’s easy to specify costs and risks upfront - benefits of action are often elusive, especially before the action is taken. This thesis plays on fear, uncertainty and doubt. This is one that is used…often!
Here are how some of these arguments propel organisational myths about innovation:
1. Experimentation-driven innovation will kill intuition and judgement
2. Online experiments will lead to incremental innovation, but not breakthrough performance changes
3. We don’t have enough hypotheses for large-scale experimentation
4. Brick-and-mortar companies don’t have enough transactions to run experiments
5. We tried A/B testing, but it had only a modest impact on our business performance
6. Understanding causality is no longer needed in the age of big data and business analytics
7. Running experiments on customers without advance consent is always unethical
Great article, well worth a read. Source: Strategy-Business
Five Key Ingredients For Digital Transformation: About 70% of all digital transformation initiatives globally do not reach their goals, according to an IDC analysis. To change a business model to accomplish digital transformation requires five key ingredients:
1. Transformation leadership comes from the top. Buy-in alone is not enough.
2. The institutions’ strategy must be revised to include market forces.
3. Customer-centricity must be embraced and should inform strategic plans.
4. Decisions and customer experiences are based on data insights driving quantifiable user outcomes.
5. Design-thinking principles are applied to define problems and solutions to customer needs.
Insurance
What Business Are You Really In? Tech & digital advancements are refining & redefining products & business models. And at the same time, business boundaries are blurring & being redefined. It is getting harder and harder to what business you are in.
All too often, I hear the discussion at a strategic level that we are in the insurance business – pricing, underwriting, distribution, claims, reinsurance and so on. Well, sort of. Taking motor for example, insurers are actually in the business of providing peace of mind- knowing your vehicle and other property is covered if you have an accident and you will get back on the road if the worst happens. So motor insurers are in the Mobility business. And new business models are rapidly emerging bringing together elements like driverless cars, car sharing, car alternatives, sales and finance and other options to get from A to B. Andrew Cornell provides some great commentary exploring these and other issues. Source: Bluenotes
Eco-Systems – Do Insurers Have A Choice Other Than To Get On Board?: Insurers worldwide are trying to keep pace with the acceleration in digital transformation. Incumbents are increasingly considering partnering with InsurTechs, and other service providers, to create a digital eco-system to supplement their digital initiatives.
Eco-systems provide a win-win opportunity by enabling new competitive insurance offerings and new market pathways. Traditional insurers gain access to up-to-date technical innovations, while InsurTechs & service providers get the required financial leverage to expand their operations. McKinsey estimates eco-systems will account for 30 percent of global revenues by 2025. Here are four main types of digital eco-system partnerships, while more possibilities are on the horizon:
1. Insurance analytics partnership
2. Value add InsurTech solution partnership
3. Niche data and technology partnership
4. External data analytics partnership
The future of insurance stands to be profoundly affected by networks and environments as conventional market boundaries continue to be broken apart in this era of digital eco-systems. Source: iireporter
Accenture on Eco-systems And Open Insurance: The insurance industry is facing significant disruption. Many insurance providers are looking to digital eco-systems to give them the agility and customer reach they require to thrive in the post-digital era:
1. 75% of insurers expect eco-systems to deliver at least half of their revenues within five years.
2. 58% are actively seeking eco-systems and new business models.
3. 82% agree that eco-systems allow them to grow in ways that are not otherwise possible.
To unlock the potential of eco-systems and generate strong revenue growth and build sustainable asset value, insurers need to seize a significant opportunity – open insurance. Open insurance substantially enhances insurers’ products and services while also opening many new revenue streams. Carriers can capitalise on the huge flows of real-time data that open insurance unleashes to launch a host of new customer offerings. Source: Accenture
Tesla Continues its Push Into Car Insurance: In Q2 2020, Elon Musk and Zachary Kirkhorn stated that the company intended to expand Tesla Insurance. Last month, those plans seemed to be pushing forward with the company taking steps to introduce Tesla Insurance in US states, including Texas, Illinois and Washington.
Outside the United States, Tesla has already introduced its insurance program to China. Tesla Insurance is also moving into other European countries like England and most recently Germany.
Last week, Elon Musk shared that Tesla was building up its collision repair capabilities. He noted that Tesla Insurance would make collision repair transactions smoother for customers. Musk announced that Tesla would be bringing collision repairs in-house a few years ago. Since then, the company has started the buildout of integrated Tesla centers that handle sales and service to customers. Source: Teslarati
Insurtech
Blue Zebra - Fun Name But a Serious Insurtech: Blue Zebra is an innovative insurtech company that offers insurance products to insurance brokers through their purpose-built portal. The business is making some great in-roads and here Matt Hodson, COO, shares some of his insurance journey and the Blue Zebra Story. Source: 11eight
Trov On Embedding Insurance: Embedded insurance has the potential to turn insurance distribution on its head - and is likely to pose a large threat for traditional distributors. Trov provides distribution customers (who they refer to as digital consumer brands - or DCBs) three methods by which they can offer digital insurance products. The first method is to use Trov’s API’s and UX elements to build insurance (quoting, selling, billing, managing, and claiming) contextually into an existing application. A second method is to White Label (affix their own brand to) an existing insurance application. And, third is to use Trov’s referral toolkit to offer insurance branded by one of its underwriting partners.
Good update from Trov around its thinking and approach on embedded insurance. Well worth a read. Source: Trov
Redefining Home Insurance – A Big Opportunity: Kin’s founder Sean Harper talks about the massive opportunity in US home insurance market. He identifies four key opportunities.
· The competitive bar is low, with most incumbents being inefficient and carrying high expense ratios.
· Good unit economics, mostly thanks to a low churn of homeowners, especially in comparison with renters and auto.
· Higher likelihood of cross-selling.
· No near-term existential threat like semi-autonomous and autonomous vehicles coming to upend homeowners insurance.
Some parallels in Australia. Source: Kin Insurance
Life360 Expands Capabilities to Tracking Tags: Super interesting acquisition proposal by Life360 for Jiobit. Life360s core offering, the Life360 mobile app, is a leading app for families, with features that range from communications to driving safety and location sharing. Life360 had more than 26 million monthly active users (MAU) in December 2020, across 195 countries & is listed on the ASX. Jiobit is a Chicago-based provider of wearable location devices for young children, pets, and seniors. Jiobit’s wearable devices could be incorporated into Life360’s family safety membership, providing holistic protection for driving, physical, and digital safety on a single digital platform.
Interesting move in the light of Apple's recent announcement regarding tracking tags. Notable investors in Life360 are IAG and Allstate. Source: Yahoo Finance
IAG Firemark Ventures Doubles Down on Arturo: IAG’s CVC, Firemark Ventures has invested in arturo.ai's $25 million Series B funding round. Arturo is an AI-powered platform that derives property insights and predictive analytics from aerial and satellite imagery. Arturo has been active in the Australian market having delivered nearly 9M AI generated property characteristics to Suncorp. Source: Arturo and BusinessWire
Koba Nearly Ready to Race: Australian start-up, KOBA, has signed a SaaS (Software as a Service) partnership agreement with By Bits. The deal will enable KOBA to launch the first connected pay-by-kilometre car insurance in Australia. Bringing a true usage-based insurance to Australia’s millions of low mileage drivers.
By Bits is a SaaS technology provider developed from By Miles, the first start-up to bring pay-by-mile insurance to the UK back in 2018. The By Bits SaaS includes a rating engine to calculate insurance premiums using modifiable underwriting and rating rules and splits the premium into a fixed amount and a per kilometre amount. It also includes an integrated policy management system that manages every aspect of the lifecycle of a car insurance policy from quotation to policy and renewal. Source: Insurtech Gateway Australia
Lemonade Moves Into Car Insurance: Launched five years ago to sell homeowners and renter's policies, the company has added both term life and pet insurance to its product lineup in the past year. It now plans to add car insurance – Lemonade Car. The company says it will use technology to handle emergencies and speed claims payments. Lemonade said it hopes current customers will bundle their auto coverage with other Lemonade policies. Source: Insurance Journal
#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.
Some Signs of Improvement But Much More To Do: Doreen Bloch, CEO of Lucky Analytics & ELLEMENT, recalls her decade-long career in the venture capital fundraising game, but more specifically, her experiences of the double standards for men & women present in VC funding. After successfully raising $3.75m (2014 to 2016), she then avoided fundraising due to the gender inequality she was experiencing.
The 2014 Babson College’s Diana Report found that “businesses with all-male teams were more than four times as likely to receive VC funding compared to teams with at least one woman.” According to Crunchbase data, last year just 2.4% of VC funding went to female-founded companies.
Despite this, Bloch foresees five key themes that give her hope for positive momentum for female founders in the next decade:
1. There are significantly more women throughout the eco-system
2. People are giving much more direct feedback
3. There are many accelerators
4. Strategics have more fluency in startups
5. It is now acceptable, and encouraged, to bring your full self.
All welcome shifts will go some way to enabling the next generation of female founders to fully embody their personalities and energies to build ever bigger businesses. Much more to do!
Source: Crunchbase
Lynda Coker- Start-up Ecosystem Influencer: Super privileged to be sharing my latest story about Lynda Coker. I have known Lynda for about ten years & every time I have the opportunity to speak with her I take so much away. Lynda is a strong contributor to the start-up eco-system in Australia & passionate about improving opportunities for females. She is currently with Volt Bank. She is also involved with Scale Investors Ltd - dedicated solely to investing seed capital for female led businesses...solving 2 problems: 1) access to capital; 2) access to deal flow & education for time-poor angels/HNWIs that want to support female led start-ups. And in her spare time, she is also involved with the Ocean Impact Organisation - working to build an eco-system to improve environmental outcomes. Source: 11eight
Closing The Gap: Historically, it has always been a challenge for women to successfully fundraise, especially at the pre-seed and seed level. However, when the shutdowns began in 2020 due to the COVID-19 Pandemic, venture capital firms and angel groups began stating that they were “doubling down on portfolio companies,” but often, what that translated to was “we're going to only invest in what we know,” which meant investing primarily in white male founders. Good piece on Marisa Warren and Kate Vale from Aliavia Ventures who are doing everything they can to help female founders. Source: Forbes
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