Lighthouse #19
Curating the best insurance, insurtech, innovation and leadership content for you.
Ron Arnold
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Exploration is the engine that drives innovation.
Edith Widder
Are insurance regulators turning their eye to data ethics?: Insurers in Australia and New Zealand, like insurers worldwide, continue to invest heavily in data and analytics to drive business outcomes. Risk selection - pricing and underwriting - has attracted a lot of attention. But this data and analytics energy also goes into everything from marketing to claims - eg fraud.
This drive to find more ways "to make money" and "serve customers" has sometimes led to some less than desirable practices, and sometimes some "accidents". The UK Financial Conduct Authority (FCA) has recently introduced rules to tackle “price walking” practices disadvantaging loyal customers. In Australia, several insurers have recently had issues with pricing/loyalty/discount structures.
As more data becomes available, compute power is leveraged, and more techniques are deployed (machine learning etc), insurers will continue to push to find competitive advantage through data - just as they have done in the past. With all this data, and these techniques, what is actually going on with data driven decisions can become very opaque. And the risk of bias is real....
Insurers would be well served thinking long and hard about how they ensure they have the right checks and balances in place. Left unchecked, the drive for results can see some other than desirable outcomes. Additionally, "unintended" bias can, and does, happen! Very interesting write up by Duncan Minty on recent statements by the regulator in California on this issue. Well worth a read.
Source: Duncan Minty
Customer Segments in the Digital Era: Interesting article from EY proposing the customer types insurers will need to service:
Consumers
1. Point-of-sale purchasers
2. Virtual vanguards
3. ESG devotees
4. Bubble protectors
5. Data capitalists
6. Minimalists
Small Businesses
7. Work-life integrators
8. Efficient entrepreneurs
9. Conscious owners
According to EY, insurers will need to master a few crucial capabilities:
> Real-time risk protection: AI, machine learning, automation, digital platforms and data analytics enable insurers to deliver personalised protections and services – instantaneously and at scale – in homes, vehicles or anywhere.
> Ecosystems and partnerships: As industry lines blur and barriers to entry fall, insurance will become ubiquitous for all types of purchases and insurers can orchestrate their own ecosystems and embed in those led by others.
> New risks necessitating new products: Evolving societal norms and cultural values – from the rise of ESG issues to personal data ownership to virtual worlds – have created new risks and thus require product innovation from insurers to provide the necessary coverages.
Source: EY
How technology will redefine the car insurance business model: Like most industries, technology is dramatically impacting car insurance - with those impacts being felt across the entire value chain. Good article by McKinsey & Company looking at some of the disruptive pressure points.
Three technologies are likely to shape future mobility solutions - autonomous driving, connectivity and embedded telematics, and vehicle electrification. McKinsey also explores three possible scenarios for insurance:
> OEMs enter the market with in-house offerings
> OEMs and insurance carriers develop partnerships
> OEMs become tech-enabled distribution aggregators and data providers
We are already seeing these types of offerings being explored by the likes of Tesla, Ford and Honda.
Very challenging times ahead for traditional insurers, as manufacturers are arguably in the box seat - they have access to the powerful connected car data and the opportunity to engage the customer - digitally. Whether and how they exploit this position remains to be seen. Nonetheless, we are seeing the emergence of a new business model that will challenge insurance incumbents!
Source: McKinsey
State Farm invests in ADT: State Farm has announced a $1.2 billion equity investment in ADT. This gives State Farm a 15% share of ADT. The partnership provides State Farm with a platform to apply Smart Home technology to home insurance, with customer benefits that may include lower costs, reduced claims, and smart home security devices that help to proactively mitigate loss caused by water, fire, or intrusion. This is the home equivalent of the "connected car" and no doubt an emerging opportunity. The closest thing we have in Australia in is Richard Joffe and the Honey Insurance team backed by RACQ. A good one to track to see how State Farm Insurance Inc look to leverage this investment and partnership.
Source: State Farm
Zego solution reduces motor claims: Some good data here on how telematics insights can support claims savings - and no doubt personal injury. Over a three month trial period, fleet managers were provided with a tailored approach by a road risk manager alongside their behavioural data to help improve the fleet’s performance. Drivers showing high-risk driving behaviours, were involved in conversations to encourage safer behaviour. Overall, twenty-eight fleets (over 1,210 vehicles) have taken part in Zego’s Risk Management Academy trials and have so far seen a 30 per cent reduction in claims on average.
I remain surprised that Australian insurers are not more active in this "telematics" space - happy to be corrected? KOBA Insurance is actively beating the drum and offer a solution. QBE Insurance has recently entered a partnership with Zego - good move in my view.
Source: Insurance-edge
CMT launches DriveWell Crash and Claims: Really interesting product recently launched by Cambridge Mobile Telematics - DriveWell Crash & Claims. The telematics solution for auto insurance claims. The CMT’s AI-driven DriveWell® platform can detect car crashes from sensor data, and insurers can proactively help customers with emergency and tow services within seconds of a crash. Learning about a crash as soon as it happens also enables insurers to use preferred suppliers.
Real-time services like crash assistance are popular with consumers, averaging a Net Promoter Score of over 80. DriveWell Crash & Claims features not only real-time crash detection and assistance, but also total loss, injury, and fraud detection capabilities.
No doubt in my mind, this is type of solution is a critical development and capability all auto insurers will need and should have. Others also offer solutions in this space. Chris Hulls and the Life360 team have a very successful offering in this space and it is noteworthy that a feature of Apple's most recent launch is the promotion of the “crash detection” (see below).
Source: Business Wire
Apple introduces crash detection: At its recent launch, Apple announced a new feature: Crash Detection. Apple's latest Apple Watches and iPhones can detect if you are in a severe car crash thanks to Crash Detection. It is reported that it will automatically connect you with emergency services, provide your location, and notify emergency contacts. Apple said Crash Detection runs only when you're driving and processes data only at the time of the crash, entirely on your device. Apple said it has studied, for years, vehicle impacts at state-of-the-art crash test labs. During its testing and development, Apple said it focused on four types of severe car crashes: Front-impact, side-impact, rear-end collision, and rollovers.
This is a very interesting development for both insurers and motoring clubs. The recent Cambridge Mobile Telematics - DriveWell Crash & Claims launch offers crash detection from sensor data, and can help insurers proactively support customers with emergency and tow services within seconds of a crash. The CMT solution also offers DriveWell Crash & Claims features not only real-time crash detection and assistance, but also total loss, injury, and fraud detection capabilities. And now it appears Apple is offering the capability and perhaps the related services.
Does this represent another disintermediation wedge that insurers and motoring clubs will have to deal with? Will the likes of Apple and CMT become the “hero”? How will these types of development redefine the insurance value chain? Will this become part of the connected car capabilities that the auto-manufacturers are developing? May depend very much on the partnering strategy of these players. Exciting times, with the prospect of great improvement in services for customers!
Source: Pocket Lint
KOBA - Looking to shake up car insurance: Andrew Wong is on a mission to deliver a better car insurance experience for Australians. He is the Founder of KOBA Insurance. Through his KOBA pay-per-kilometre proposition he is rewarding low usage drivers, with some saving up to 50% of their previous premiums. Whilst yet to take off in Australia, overseas, usage based propositions are starting to generate strong momentum. In Australia, it is a question of "when, not if".
Next year Andrew's KOBA will be extending the service to deliver benefits like:
> find my car
> crash detection with emergency response
> safe driving types
> carbon emissions tracker
The KOBA business is getting good traction - with Andrew sharing that growth is running at 50% month on month for the past 6 months.
I was lucky enough to speak to Andrew about his journey, where he finds his inspiration, his learnings so far and his goals and ambitions with KOBA.
Source: 11eight
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