Insurance tech, compliance and market statistics
Compliance, insurance tech and market statistics generated a lot of interesting news last month. A common theme from the Financial Conduct Authority is fairness. This is also an important issue for insurance technology, with a continued focus on digital ethics. Technology news continues to dominate the insurance market, together with activities in the Lloyds market, the changing risk landscape and Merger and Acquisition activity. Despite being the start of traditional Summer holidays, July was certainly not a ‘slow news’ month for insurance.
Financial Conduct Authority (FCA) Regulation Round Up
- Unfair terms: The FCA had concerns that an exclusion term in a travel insurance contract was not sufficiently transparent. They concluded it contradicted another term and, as a result, consumers may have been confused about whether the policy covered them and whether they could make a claim. The firm concerned have co-operated fully and have now now released a notice of undertaking .
- Access to Travel Insurance: The FCA are working with other groups to make sure that people with pre-existing medical conditions can get travel insurance at ‘the right price’. As a result of this work, they have now published their proposals, with feedback required by 15th September 2019.
- Vulnerable customers: In an extension to their work on travel insurance, the FCA have started a consultation guiding firms on the fair treatment of vulnerable customers. Responses to the consultation need to be submitted by 4th October 2019. We outlined some of our thoughts on this subject in our blog, How can we increase access to insurance?
- Fair Pricing: The FCA published ‘Fair Pricing in Financial Services: Summary of responses and next steps.’ Following this review, the FCA will now formally embed their thinking into their regulatory approach.
- Claims Management Companies (CMCs). The deadline for the final application period for CMCs was 31st July 2019. Any firms that have missed the deadlines must wind down their claims management activities and cannot take on any new work.
Other Compliance information
- Transforming compliance in Financial Services: KPMG have published a useful white-paper around improving effectiveness and efficiency. The report includes a section on effectiveness and efficiency gains driven by data and technology, for example robotic automation; data-mining and advanced analytics for financial crime prevention and innovative approaches to regulatory training.
Insurance tech in focus:
- Chartered Institute of Insurers (CII): The CII has released to digital ethics standards. The guide was developed by the CII’s Digital Ethics Forum, which consists of digital and policy experts from the likes of the Association of British Insurers, British Insurance Brokers Association, Aviva, Worry+Peace, and Capital Law.
- TED Talks: For anyone interested in AI, this is a ‘must save’ link to the Best TED talks on artificial intelligence. We also outlined our thoughts on this subject recently in Artificial Intelligence Trends.
- Fraud: This Forbes article Top 9 ways Artificial Intelligence prevents fraud. contends that rule-based engines and simple predictive models no longer keep up with the scale and severity of fraud attempts today. As a result, they contend a different approach is needed, namely AI , which they feel is a perfect match for the challenges of battling fraud.
Internet of Things
- Smart Homes: A recent article ‘Neos SmartCam Disrupts UK Smart Home Market’ reveals that the insurance provider has sold over 75,000 SmartCams since January 2019. Aviva took a majority stake in Neos last year, thereby showing their interest in the smart home approach to insurance.
- Current state of the insurtech sector: The report Half a year at the heart of the European Insurtech Scene is a comprehensive overview of the insurtech market. including views on how insurance tech will revamp the value chain together with a round up of the start-up companies have been attracting the investment.
- Mobility as a Service (MaaS): MaaS is yet another concept for insurance. In a recent article Partnering with InsurTechs to face the challenge of Mobility as a Service, KPMG contend that MaaS is becoming a fast-rising trend, consequently it is ‘one to watch’
- Pineapple: Travelers select Pineapple as innovation prize winner. In brief, Pineapple allows individuals to insure possessions by uploading a photo to a mobile app. In addition any unused premiums at the end of the year can be withdrawn as cash. The approach is especially attracting the younger age group who do not happily engage with insurance.
- PwC Cohort: The PwC insurtech team have announced their 2019 InsurTech Cohort. The eight firms included offer an interesting range of solutions such as risk management, price optimisation, compliance and reporting and customer relationship management.
- A new insurtech ‘unicorn’: Insurer Hippo hits £1 Billion Unicorn Valuation. Hippo is a US based Managing Agent that currently holds a licence in 17 states. Hippo is taking a different approach to home insurance, for example by using Internet-connected sensors, satellite imagery, and automation, among other technologies, with a mission to deliver better (and ideally cheaper) insurance.
- Cuvva: UK-based short-term insurance start-up Cuvva has sold over one million policies via its mobile app, subsequently delivering around 750 percent growth in sales over two years. More details are outlined in the report from The Fintech Times
- Autonomous Driving Data: Lyft opens a set of autonomous driving data to the public. Lyft is sharing the data to “help level the playing field for all researchers interested in autonomous technology.”
Other insurance topics in the spotlight last month:
- Lloyds of London: According to a statement from Shelia Cameron, the Chief Executive, a “once-in-a-generation change is underway at Lloyds.” The statement outlines six ‘transformation initiatives’ that have been shared with the market for feedback. The Lloyd’s Lab was born out of one of these initiatives, namely to ‘develop a resource ecosystem to support innovation and service’. Indeed, ClauseMatch, one of the insurtech initiatives supported by the Lab, revealed the findings of the 10-week pilot. last month.
- Top Global Risks for 2019: Allianz have released their eight Global Risk Barometer. Cyber incidents (37% of responses) are neck-and-neck with Business interruption (BI) (37% of responses) as the top business risks globally.
- Discount rate: The decision on the discount rate generated numerous headlines and column inches. The report from the Law Society Gazette was one of the most balanced articles. The Government responded explaining why it set the rate at -0.25%.
- Market insight: Zurich released their Claims Quarterly Journal with a focus on Casualty and Motor lines.
Mergers and Acquisitions
- Davies Group: The Davies Group announced the acquisition of GBB Holdings. GBB Holdings includes GBB, a specialist forensic investigation business as well as Branwell that specialises in collision investigation. Both businesses will join the DaviesMotor Claims Division.
- Arch Capital Group: Arch Capital Group Ltd. has entered into an agreement to purchase Barbican Group Holdings Ltd. The transaction is pending regulatory approvals