InsurTech - Charge and Accelerate
A view from above on InsurTech
As Automotive Engineer and International Insurance & Claims Manager I’m close to both the Car and the Insurance industry. Looking at what’s happening from a change perspective there is no bigger difference conceivable!
Car industry: Spot on the horizon is Autonomous, Connected, Electric and Shared. Driven by Safety & Sustainability, enabled by Technology. Radical change in Business Model (from Car to Mobility & Electrification), Strategy, Relationships, Production and Distribution. An enormous transition is taking place right now. Reinventing the business with hundreds of billions of investments for the next 5 years.
Insurance industry: Spot on the horizon is Avoiding Claims instead of (only) handling them. Risk Management at the front, not (only) in the back. Driven by Safety & Sustainability, enabled by Technology, not any different from Car. But: the radical change in the insurance business model (moving from Claims to Prevention) is not happening yet.
I have been part of the InsurTech Scene from before the term was coined. With a huge backlog of opportunities growing fast into a hype, InsurTech has by now become an industry in itself, with a myriad of summits & events. You would expect that this all would lead to substantial business model innovation. However, my conclusion after a few years can only be: plenty of noise and money but no serious, scalable change.
Read “The Great Standstill” (Fintech Futures) and many other high standing analyses. Already in May 2016 I wrote my blog: Bla Bla Insurance, back then with a similar conclusion and a roadmap to move on.
Time to move on
Apparently there is no urgency so far to reinvent the business after 350 years. What is holding incumbents back? Is it a timing issue? Lack of execution power? Lack of money?
It can’t be money - there’s enough of that but that might be just part of the problem.
After witnessing the waves of “Online” and “Mobile”, “IoT” is obviously the Third Wave. And supported by AI/ML this will finally be the game changer. A serious one that will shift the business model from compensation after the fact to offering safety upfront.
Don’t misunderstand “game changer”. It has nothing to do with “If you install this safety device/package you get a premium discount of x%”. It has to do with a fundamental shift in how we manage our daily risks. By creating awareness and changing behavior. Resulting in substantial less premium, to be compensated by new revenue streams coming from new (prevention) services.
Guess most of the pain lies here. Reinventing a very old and still profitable business with at the same time plenty of challenges that are more urgent.
And yet this Third Wave will come. Waiting for Claims is not the answer anymore in an era of Smart Technology & Data and with 32% Connected Homes in 2020 the consumer is taking the lead.
Taking the startup perspective
We started working on InConnect (Safety First and then Insurance but in a new (inter)active and transparent way) in 2016. Developing the business model, blueprints, prototypes, testing (smart) technology and validating with customers. There is so much to do and to learn. And Technology, AI/ML, etc. are emerging so fast that time is of the essence. It will for sure take years to get to maturity.
With InConnect we have been in touch with many local and international (re-) insurers including related CVCs. They listened and looked, understood the logic, appreciated the concept, confirmed this is the future and continued with their existing business. Many InsurTech-Startups and Service Providers we speak confirm the same experience.
One insurer explained to me that the Insurance sector has already lost the battle around IoT. I don’t see it like that. I believe the opportunity is rather in co-operation than in competition. We know that Change in Insurance is a long-term game. Also for some good reasons by the way. As we believe that a shift towards Prevention (Safety First) is inevitable we continue to further develop and look for other parties as well, where IoT added value propositions are more urgent.
Being the pioneers of Online- and Mobile Insurance we’ve now the roadmap ready for Connected Insurance.
Charge and Accelerate
I do appreciate the quote from Prof.Dr. Ralph Speth (CEO, JLR) being in a heavy transition with Jaguar Land Rover.:
“We are taking decisive action to help deliver long-term growth, in the face of multiple geopolitical and regulatory disruptions as well as technology challenges facing the automotive industry. The ‘Charge and Accelerate’ programme combines efficiency measures with targeted investment, safeguarding our future and ensuring that we maximise the opportunities created by growing demand for Autonomous, Connected, Electric and Shared technologies.”
‘Charge and Accelerate’ is what I would recommend to all the InsurTech Startups dealing with the slow take-up. Use it to fuel up to the max. Time will come. The Future of Insurance is in Prevention.
And… It required only one company - Tesla - to drive all other car manufacturers crazy.