Insurance innovations, risks and huge investments
Insurance innovations, risks and huge investments in the market all make for some fascinating reading this month. Stand-out articles for me include the report on autonomous cars, the insurance tech investment trends and the look at e-scooters. In addition, the news from the insurtech sector continues to show-case innovative thinking in the insurance market.
Financial Conduct Authority (FCA) Regulation Round Up
- Cyber resilience: The FCA shared this infographic which includes tips on good practice. It also highlights some stark statistics. As an example, 66% of medium/large UK companies were subjected to a cyber-attack in 2016. They have also issued cyber security – industry insights citing industry examples.
- New FCA Directory.:The FCA are compiling a new Directory of Financial Firms aimed to make it more difficult for unsuitable people to operate in the UK market. Firstly companies need to Register for Connect. Then Insurance Companies (and their Appointed Representatives) must submit their data using Connect before 9th March 2020. All other regulated firms must submit their data between 9th December 2019 and 9th December 2020. Full instructions are on the website.
Other Regulation information
- Regulation risk: Recent broker research from Allianz reveals Regulation poses the biggest risk to UK SMEs. Consequently, SMEs see brokers as a source of information and support as well as valuing their insurance expertise.
- Insurance Distribution Directive: A year on from the introduction of this legislation and it appears that Brokers welcome IDD impact. However, the same survey reported in this article also sadly indicates that trust is still a major concern in the insurance market.
- Ethics: The Chartered Insurance Institute (CII) has backed a report from the Centre for Data Ethics. The paper discusses potential use of Artificial Intelligence (AI) across the insurance profession and argues that the insurance sector must engage with the public to agree the responsible use of AI. The debate is covered clearly in the article AI in insurance : positives and challenges. In addition to this coverage, Charles Taylor also published a thought-leadership piece, The ethics of artificial intelligence. The article concludes with this sound advice. Companies need to incorporate ethics into their data governance processes.
- Pros and cons: The article 10 Artificial Intelligence Pros and Cons you don’t know about is well worth reading for those interested in this technology. Quoted statistics from a Pega Global Study reveal that 77% of modern consumers actually use a form of AI technology. Consequently, irrespective of the pros and cons, this technology is here to stay.
- Insurance placement process: The insurance broking and risk management firm Marsh has piloted a blockchain-based digital placement platform called Risk-Exchange. According to their News Release, “Risk Exchange has the potential to transform the insurance placement process toward an interactive, digital experience…”
- Effect of autonomous cars on the insurance market: A recent report from the global law firm Kennedys polled over 6,000 people across six Countries as well as talking to key industry leaders. The result is some interesting insight, including the fact that fewer than a third of UK respondents (28%) currently support the idea of fully driverless vehicles. However, the report headline paints a very positive picture for consumers if this technology takes off, namely Autonomous vehicles may wipe sixty percent off car premiums
- Bundled insurance: Meet the Insurtech reports on Branch . an interesting case-study for bundling insurance products. Although based in the US, it will be one to watch. Particularly to see if consumers welcome bundling multiple insurance products with one provider if the process is easy.
- Direct Line: This headline says it all, Direct Line builds an Insurtech it can tweak a thousand times a day. In brief, the objective is to enable Direct Line to react quickly to changes in the market.
- Collaboration: Met Life provided another example of Insurer collaboration with Insurtech solutions. Met Life Auto and Home has partnered with Zesty.ai, with the goal of improving assessments in wildfire protection. In particular Met Life was attracted by the ability to receive three-dimensional imagery.
- More Insurtech funding for innovative projects:
- Insurtech investment trends: The press release outlining details of the Hampleton Partners Report reads Insurtech’s Record Breaking $3 billion investment in 1H2019 Transforming Business Markets and Opening New Markets. The article provides positive reading for the future of insurance innovation. The emerging technologies that atract particular attention from investors include telematics and wearable tech gadgets, drones and mobile-first platforms. Alongside this, Insurance Age reported Artificial Intelligence UK investment reaches record levels.
- Life Insurance: A Leicester based insurtech firm has secured serious funding. Insurtech firm DeadHappy secures £4 million reports that the company aim to remove the stigma around conversations about death. As a result of this funding, the firm also plans to expand their technology and create additional products including digital wills, accidental death and critical illness cover
- Travel insurance: An insurtech that helps travellers to find local doctors has raised $3.1 million in seed funding. In this article from Crowdfund Insider, Air Doctor claims “… we have been able to reduce the cost per claim by an average of 60%…”
Other insurance topics in the spotlight last month:
- L & G Launch innovative product: L & G launched their Rental Protection Plan, following a successful pilot with Mortgage Advice Bureau. A summary of the product is included in this article, L & G announce full roll-out of a new rental protection plan insurance.
- RSA Announced major strategy change: RSA announced that it is merging its Commercial Risk Solutions and Global Risk Solutions to create a unified Commercial Division. Lawrence Fraser Brokers published an article Egan reveals thinking behind RSA’s commercial merger. Egan believes it will be easier for brokers to deal with RSA as a result of this reorganisation.
- The Lloyds Market: Earlier last month Lloyd’s launched a global event monitoring app that uses enhanced machine learning and AI. More details in the article London Market Group launches free event tracker. Besides news of this event app, Lloyd’s have released more plans to move trading on-line. The article Lloyd’s of London to go electronic to compete with low cost rivals underlines the huge task that lays ahead, both in terms of cost and retaining broker loyalty. This is the first step of Blueprint One, the strategy for Lloyd’s to build ‘the most advanced insurance market place in the world’
- 3-D Modelling technology: The insurance claims process continues to highlight innovative use of technology, this time as Travelers partner with Hoover for 3-D modelling in claims. “Hover will help claim professionals inspect damage without the need to climb ladders, or allow the policyholder to quickly submit claims without the need for on-site inspections.” In addition to this enhancement, Travelers were also an early user of drones in the claims process.
- Aon Auction Tech: The broker Aon has developed a platform to allow blind-bidding for both non-concurrent (where reinsurers receive different pricing based on the quotes provided) and concurrent placements (where the technology helps by finding a consensus bid, so each reinsurer gets the same price across the layer). In the article Aon launches reinsurance auction tech for Jan 2020 renewals, To summarise, Andy Marcell, CEO of Aon’s Reinsurance Solutions commented “We constantly strive to transform the way we do business and enhance the placement experience for our clients. Our investment in technology gives insurers the power to choose how to secure robust reinsurance protection…”
- E-scooters: An interesting article, The rise of the E-Scooter and its insurance challenges highlights this fast emerging risk. In particular, the report highlights the confusion around which insurance policies will pick up an E-scooter liability claim.
Mergers and Acquisitions
- Cyber Insurance activity: Insurance Business Magazine reported that H W Kaufman Group buys London-based cyber MGA. Interestingly, Node, the MGA in question, says its mission is to “stay on the very front-line of technological change … to ensure that emerging digital risks, through technological innovation, are adequately insured and protected against”. Consequently, technology is embedded both in the solution AND the risks.
- Investments: A recent headline from Fortune magazine announced “The Sexiest Category in Tech right now? Insurance.” The article includes some interesting market facts and figures. In short, “There’s plenty of investor appetite in the insurance sector”