Future of Insurance

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FUTURE OF ENVIRONMENT INSURANCE Insurers have to meet Distributed in climate change head on

Published in association with Insurance against climate change is fast becoming non-negotiable for both individuals and businesses

Olivia Gagan risk of water entering your facility. Contributors Greater resilience opens up more limate-change risk to the options, like parametric insur- Anthony Beachley Josie Cox C insurance sector has never ance, which uses sensors to detect Former BBC World Service Business reporter, been greater. Weather water exceeding a particular depth journalist specialising in commentator and anomalies are now commonplace: in buildings and can result in an David Gray/Getty Images Gray/Getty David finance and tech, his work broadcaster, she worked at the past year alone saw unprece- instant payout. Anything below has been published in the Reuters and The Wall Street Spectator, Economist and Journal, and was business dented wildfires in California and that [is covered by the fact that] The Independent. editor of The Independent. Australia, exceptional flooding in you’ve built flood resilience into Venice and the costliest typhoon on your building,” she says. record in Japan. Parametric insurance makes sense Marianne Curphey Cath Everett 2017-18 was the most expen- if businesses have prepared them- Award-winning financial Journalist specialising writer, blogger and in workplace, leadership sive two-year period on record for selves by taking action to install columnist, she has held and organisational global re-insurance, which had resistance and recoverability meas- positions at The Guardian culture, she also writes to stump up $219 billion to set- ures, Adams adds. Each property is and The Times, and about the impact of tle claims for weather-related different, but a business that could writes for a variety technology on business damages, according to a World more easily qualify for paramet- of publications. and society. Economic Forum report. ric insurance would be one which Olivia Gagan Oliver Pickup That’s just for those who can get can tell their insurer: “I've moved Journalist writing about Award-winning journalist, insurance. Antony Woodhouse, my electrical sockets up. I've put energy, sustainability he specialises in partner at law firm DWF, says: “One in water-resilient plasterboard. and culture for titles technology, business and of the biggest issues is whether I've tanked out my floor. I put some including The Times, sport, and contributes to a The New York Times and wide range of publications. insurance companies can carry on pumps in. I’ve moved my product Time Out London. offering insurance that responds to Dr Bev Adams, head of catastro- aren’t compensated for a specific on to crates. I’ve moved my key climate change-related risks. The phe resilience at insurance broker loss, like a collapsed factory wall machinery up.” more frequent the natural disas- and risk manager Marsh, says that or a waterlogged sofa, but for the Insurers like parametrics because ters, the more difficult it can be to in the UK and beyond, the indus- triggering event, like a flood or a they know in advance what the set- find insurers with an appetite to try’s approach to climate change drought. A pre-agreed sum of cash tlement will be and the exact con- provide cover. and flood is evolving. As risk is paid out when floodwater reaches ditions that will lead to a payout. “There's also the issue of insur- heightens, the payouts grow and a certain level, for example, or tem- It’s a model that could work well for ers adjusting their prices to reflect the gap between climate risk and peratures or wind speeds hit a people and businesses in high-risk the increase in risk of freak events. protection gets bigger, so the sector predetermined high. areas which fail to qualify for tradi- Premiums would necessarily rise is starting to focus on recoverabil- Adams says we should increas- tional insurance. and become unaffordable to some ity, as well as prevention. ingly expect preventative meas- Such cover relies on data and people, which could then become a Cue the rise of a different type ures to be built into homes and measuring tools. UK parametric social and political issue.” of cover against climate change: businesses. “Traditional insurance insurer FloodFlash calculates its As a result, governments and regu- parametric insurance. Policyholders protects you financially against the premiums according to the flood lators are increasingly asking insur- risk it believes an individual or Publishing manager Head of production James Studdert- Justyna O'Connell ers if they can handle the liabilities business faces. It calculates this climate change represents. Since using data such as historic rainfall Kennedy NATURAL CATASTROPHES AND INSURANCE Design last year, the Bank of England’s records and sensors which measure Associate editor Joanna Bird Prudential Regulation Authority the quality of terrain. Tamper-proof Peter Archer Sara Gelfgren Customers with medium has required insurers to stress test sensors developed by ex-Dyson Kellie Jerrard to high-risk exposure to Deputy editor Harry Lewis-Irlam their businesses against the risk natural catastrophes staffers are installed at the insured Francesca Cassidy Celina Lucey that the world fails to meet temper- location, triggering a payout when Colm McDermott ature and carbon reduction targets. water reaches a pre-agreed depth. Managing editor Samuele Motta Independent watchdog, the Asset Dr Bronwyn Claire, senior pro- Benjamin Chiou Jack Woolrich Owners Disclosure Project, has gramme manager of ClimateWise, a 69% 75% warned that the industry is failing University of Cambridge-backed net- Digital content executive Head of design to meet the objectives of the 2016 PERSONAL LINES COMMERCIAL LINES work of insurers seeking to reduce Taryn Brickner Tim Whitlock INSURANCE INSURANCE Paris Agreement. the impact of climate change on the So how is the industry adapt- sector, is focused on industry best ing? In the UK, flooding is per- practice to provide as much cover for

Although this publication is funded through advertising and haps the biggest climate risk. UK natural disasters as possible. 13% 22% sponsorship, all editorial is without bias and sponsored features trade organisation Business in the “How do we make sure that as are clearly labelled. For an upcoming schedule, partnership Community estimates 40 per cent much is covered by insurance as pos- inquiries or feedback, please call +44 (0)20 3877 3800 or of businesses close for good after sible, so everyone can be more resil- email [email protected] a catastrophic loss from flood- ient and bounce back?” she asks. Raconteur is a leading publisher of special-interest content and ing, with small businesses los- Customers with As high-impact weather events are research. Its publications and articles cover a wide range of topics, ing 50 working days on average comprehensive coverage increasingly seen more as an expec- including business, finance, sustainability, healthcare, lifestyle and technology. Raconteur special reports are published exclusively in after a water breach. February tation than a risk, insurance against The Times and The Sunday Times as well as online at raconteur.net 2020 saw Storm Ciara and Storm Insurers who feel that the risks are climate change now seems to be The information contained in this publication has been obtained Dennis overpower homes and driving demand for new offerings about enabling recovery for as many from sources the Proprietors believe to be correct. However, high streets and batter infrastruc- people as possible. There is a sense no legal liability can be accepted for any errors. No part of this ture, just two months after then- of inevitability about the physical publication may be reproduced without the prior consent of the Personal Commercial environment secretary Theresa lines insurance lines insurance damage society must reckon to cope Publisher. © Raconteur Media 15% 26% Villiers promised an inquiry into with as a result of climate change. why many flood-prone communi- Claire concludes: “The goal now is to @raconteur /raconteur.net @raconteur_london ties are denied insurance. Capgemini 2019 recover quicker.”

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FUTURE OF ENVIRONMENT INSURANCE Insurers have to meet Distributed in climate change head on

Published in association with Insurance against climate change is fast becoming non-negotiable for both individuals and businesses

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self-employed workers, who typically don’t have the protection and TOP REASONS WHY FREELANCERS DON’T TAKE TIME OFF benefits he had taken for granted. UK survey of over 900 freelancers “What became apparent was that all these people had turned to self-employment for the same reasons of flexibility, greater earning potential and choice of work,” Don’t want to let he says. “But they had left them- clients down 62% selves in a risky position in terms of financial wellness. “Most of them had children, but Worried about no income protection (IP) and future periods they were not receiving the legal of little/no work or financial advice they needed. 60% I couldn’t comprehend why, in such a big shift in the make-up of the workforce and the rise of the gig economy, there were woefully inadequate services available for 57% self-employed workers.” Don’t want to lose Beilin resolved to revolution- money when they can ise insurance cover for freelanc- be working instead ers. In April 2019 he launched Collective Benefits, which pro- IPSE 2019 vides freelancers with benefits including sick pay, maternity leave and mental health sup- IPSE calculates there is a record as needed is filling a much-needed Understanding port. Validation that high of around five million peo- insurance gap, providing gig-econ- there is a market need ple, just over 15 per cent of the UK omy workers and freelancers with a arrived quickly as in workforce, who are self-employed, better alternative.” late-November the young of whom freelancers account for Insurance cover for freelancers insurance megatrends organisation was selected almost half. Only 4 per cent of those on demand may be a click away for as one of 13 startups, out of five million workers have IP in place, those in the know, but are enough more than 600 applicants, though, according to a recent report self-employed workers sufficiently Emerging megatrends in a fast-changing world, increasingly to join Facebook's London- from insurer LV=. Moreover, 33 per educated about their insurance based accelerator LDN_LAB. cent of self-employed people could options? Steve Bryan, director of impacted by climate change, pose testing challenges for the He points to research, pub- not survive for more than three distribution and marketing at The lished in January by respon- months if they lost their income. Exeter, an insurance provider that insurance industry sible technology think tank How have we got here? “Simply put, celebrates its centenary in seven Doteveryone, that suggests 93 insurance products have not evolved years, understands why more people per cent of freelancers lack any in 300 years,” argues Beilin. “It seems are opting for a freelance career, but hocking bush fires in Australia is placing unusually high demands on to clarify whether cyber risk is covered SELF-EMPLOYMENT IP, health or critical illness cover. obvious that they should be adapted warns: “All that glitters is not gold.” S recently dominated head- the profession and impacting the port- under their existing suite of policies. “That number is so shockingly high when new markets emerge, but the He is sure more can, and must, be lines around the world and folio of risks insurers cover. “It can be difficult to assess the ade- because freelance insurance prod- most prominent players are laggards.” done to help freelancers. will dominate insurers’ inboxes for “While insurers have always faced quacy of existing products,” says Laird. ucts are inaccessible, inappropriate Ben Rose, chief underwriting “Undoubtedly, there is still a sig- some time to come as families and change, it is the number of megatrends “There are a whole series of uncertain- and unaffordable, something we are officer and founder of Digital Risks, nificant ‘protection gap’ and advis- businesses count the cost of the dev- that is unusual,” says Laird. He cites as ties which means insurers need to con- Oliver Pickup Closing the actively trying to solve,” says Beilin. an insurance provider focused on ers play a critical role in narrowing astation. But were this season’s fires a examples the increasing use of tech- stantly be reviewing their products, pric- “Currently, for example, a self- the requirements of digital busi- that gap,” he says. “They are ideally one-off extreme event or a new norm? nology, political unrest, cyber and cli- ing and adequacy of reserves. Adequacy hen Anthony Beilin suf- of sickness for a quarter of a year, I employed individual might pay three nesses, agrees. “The shift to self- placed to kickstart those difficult “It’s impossible to say at the moment” mate change. “The challenge for insur- of reserves is incredibly important for W fered a prolapsed disc two wouldn’t be able to afford the mort- times more for health insurance com- employment has developed at an conversations and educate their free- says Simon Laird, global head of insurers is that it is hard to predict the new insurers and something the regulator protection gap years ago and was automat- gage or cover child costs’.” pared to the tax-efficient corporate astonishing rate,” he says. “The lancing clients on why IP is a neces- ance at law firm RPC. “We are seeing a and evolving risks arising out of these takes a keen interest in.” ically afforded three months’ paid Alarmed but curious to explore rate. No wonder uptake in insurance transition has happened so quickly sity and not just a ‘nice to have’.” series of new and evolving risks that are global megatrends,” he adds. The industry needs urgently to exam- sick leave by his corporate employer, this worrying comment, Beilin cover for freelancers has been so poor that an insurance lag has developed, hard to quantify in traditional ways.” “Insurers talk about the importance of ine how these megatrends might affect starting a business from scratch soon learnt the scale of vulnera- and people are willing to risk living whereby traditional market players’ Insurance, as a business, demands making evidence-based decisions. These its portfolio of risks and keep an eye for gig workers was the last thing on his mind. bility facing a growing number of without that financial safety net.” rigid policies are unable to match a wealth of data to be profitable. You megatrends are changing the nature, out for new ones on the horizon. Will, Yet as self-employed well-wishers Providing reasonably priced insur- this fast-moving industry.” can, of course, insure anything from an frequency or severity of insured events. for example, the law around mental expressed their envy at his financial ance cover for freelancers is crucial However, the meshing of two ver- alien abduction to a skydiving nonage- The data insurers have to hand does not health develop in such a way as to The exponential rise of the freelance situation, and it became clear inex- for businesses in particular and soci- ticals – the shift towards a freelance narian, but such one-off events are a necessarily help them to understand introduce a new megatrend? pensive insurance cover for free- ety in general, given how rapidly the workforce, plus the ability to dis- Insurance products specialist side of the industry. Setting that changing risk. Take the bush fires; Not surprisingly, those who best workforce is a much-discussed trend across lancers didn’t exist, Beilin identified make-up of the workforce has trans- tribute and engage people on digi- the right premium generally relies on there have been bush fires for years, but understand the uncertainties as they a protection gap that he felt duty- formed in the last decade. Indeed, tal platforms – has forged an excit- should be adapted an in-depth understanding of the cus- how will the frequency and severity be evolve will be best placed to deliver sus- the globe, but is enough being done to protect bound to narrow. the Association of Independent ing chance for those progressive when new markets tomer, the product and the probability amplified by climate change?” tainable underwriting profits. That may “It was only after some freelance Professionals and the Self-Employed and agile enough to take advantage. of insured events occurring. Insurers are experts at assessing prob- well mean a forensic re-examination of those who don't have cover? friends visited me that I realised 93% (IPSE) estimates the number of free- The sluggishness of market incum- emerge, but the most An underwriter assessing risk will abilities, but the present age of disrup- contracts; “standard” clauses may need the extent of my good fortune,” says lancers in the UK has surged by 35 bents has accelerated the emer- be looking to the past for that under- tion can make it hard to understand to be revised or new products devel- the co-founder and chief executive per cent since 2009. Consider that gence of nimble insurtechs, such prominent players standing; without a reliable data set claim trends. In some cases, the law is oped to meet new challenges. Insurers of Collective Benefits. “The penny of freelancers lack any IP, health or the solo self-employed market con- as Collective Benefits, Digital Risks behind it, risk assessment becomes playing catch up. It has taken two years will need to innovate to stay ahead of the critical illness cover are laggards dropped when one said, ‘You are so tributed a whopping £275 billion to and many others, looking to offer considerably more difficult. already for the UK courts to weigh the game in a digitally transformed world. lucky. If I had time off work because Doteveryone 2020 the UK economy in 2018. freelance insurance that is spe- But underwriters are now having to evidence on whether supermarket chain Despite the overflowing data pools that cialised, personalised, flexible and cope with a rapidly changing world that Morrisons is vicariously liable for the are being produced by new technol- wide-ranging, at a reduced cost. actions of a rogue employee who pub- ogy, insurers are wrestling with a series “There are great opportunities for Rallying for a more joined-up lished sensitive staff details online and of unknown unknowns. It is time to take the insurance sector to refresh its approach, and collaboration between the final decision is not expected until stock of the portfolio of risks your busi- approaches and offerings to serve the insurtechs, more traditional pro- later this year. ness covers and ensure you understand this growing self-employed market,” viders and the government, Bryan Uncertainty such as this is often the impact of these megatrends. says Freddy Macnamara, founder adds: “Ultimately, advice is what is resolved by legal disputes or changing and chief executive of Cuvva, which going to make the difference and will It is time to take regulation. In the meantime, how do has been offering flexible car and be the driving force behind how the stock of the portfolio insurers assess and price the risks of that For more information please visit travel insurance through its mobile freelance insurance marketplace will kind of data breach? www.rpc.co.uk application since 2017. “Innovative look in five years.” of risks your business Or take the issue of “silent cyber”, startups are stepping up to the chal- Given the record number of covers and ensure whereby an insurer may have to pay lenge, building flexible, short-term self-employed workers looks certain out on cyber losses under a policy not products, filling a gap between com- to continue rising in the coming you understand the designed for that purpose. The cyber mercial and personal insurance. decade, it makes sense for everyone impact of these risk arising out of the technology meg- “The flexibility of short-term in society that education and advice atrend has arguably caught out insurers insurance that can be switched on is provided as soon as possible. megatrends and the markets are now taking steps 04 FUTURE OF INSURANCE RACONTEUR.NET 05 Commercial feature

self-employed workers, who typically don’t have the protection and TOP REASONS WHY FREELANCERS DON’T TAKE TIME OFF benefits he had taken for granted. UK survey of over 900 freelancers “What became apparent was that all these people had turned to self-employment for the same reasons of flexibility, greater earning potential and choice of work,” Don’t want to let he says. “But they had left them- clients down 62% selves in a risky position in terms of financial wellness. “Most of them had children, but Worried about no income protection (IP) and future periods they were not receiving the legal of little/no work or financial advice they needed. 60% I couldn’t comprehend why, in such a big shift in the make-up of the workforce and the rise of the gig economy, there were woefully inadequate services available for 57% self-employed workers.” Don’t want to lose Beilin resolved to revolution- money when they can ise insurance cover for freelanc- be working instead ers. In April 2019 he launched Collective Benefits, which pro- IPSE 2019 vides freelancers with benefits including sick pay, maternity leave and mental health sup- IPSE calculates there is a record as needed is filling a much-needed Understanding port. Validation that high of around five million peo- insurance gap, providing gig-econ- there is a market need ple, just over 15 per cent of the UK omy workers and freelancers with a arrived quickly as in workforce, who are self-employed, better alternative.” late-November the young of whom freelancers account for Insurance cover for freelancers insurance megatrends organisation was selected almost half. Only 4 per cent of those on demand may be a click away for as one of 13 startups, out of five million workers have IP in place, those in the know, but are enough more than 600 applicants, though, according to a recent report self-employed workers sufficiently Emerging megatrends in a fast-changing world, increasingly to join Facebook's London- from insurer LV=. Moreover, 33 per educated about their insurance based accelerator LDN_LAB. cent of self-employed people could options? Steve Bryan, director of impacted by climate change, pose testing challenges for the He points to research, pub- not survive for more than three distribution and marketing at The lished in January by respon- months if they lost their income. Exeter, an insurance provider that insurance industry sible technology think tank How have we got here? “Simply put, celebrates its centenary in seven Doteveryone, that suggests 93 insurance products have not evolved years, understands why more people per cent of freelancers lack any in 300 years,” argues Beilin. “It seems are opting for a freelance career, but hocking bush fires in Australia is placing unusually high demands on to clarify whether cyber risk is covered SELF-EMPLOYMENT IP, health or critical illness cover. obvious that they should be adapted warns: “All that glitters is not gold.” S recently dominated head- the profession and impacting the port- under their existing suite of policies. “That number is so shockingly high when new markets emerge, but the He is sure more can, and must, be lines around the world and folio of risks insurers cover. “It can be difficult to assess the ade- because freelance insurance prod- most prominent players are laggards.” done to help freelancers. will dominate insurers’ inboxes for “While insurers have always faced quacy of existing products,” says Laird. ucts are inaccessible, inappropriate Ben Rose, chief underwriting “Undoubtedly, there is still a sig- some time to come as families and change, it is the number of megatrends “There are a whole series of uncertain- and unaffordable, something we are officer and founder of Digital Risks, nificant ‘protection gap’ and advis- businesses count the cost of the dev- that is unusual,” says Laird. He cites as ties which means insurers need to con- Oliver Pickup Closing the actively trying to solve,” says Beilin. an insurance provider focused on ers play a critical role in narrowing astation. But were this season’s fires a examples the increasing use of tech- stantly be reviewing their products, pric- “Currently, for example, a self- the requirements of digital busi- that gap,” he says. “They are ideally one-off extreme event or a new norm? nology, political unrest, cyber and cli- ing and adequacy of reserves. Adequacy hen Anthony Beilin suf- of sickness for a quarter of a year, I employed individual might pay three nesses, agrees. “The shift to self- placed to kickstart those difficult “It’s impossible to say at the moment” mate change. “The challenge for insur- of reserves is incredibly important for W fered a prolapsed disc two wouldn’t be able to afford the mort- times more for health insurance com- employment has developed at an conversations and educate their free- says Simon Laird, global head of insurers is that it is hard to predict the new insurers and something the regulator protection gap years ago and was automat- gage or cover child costs’.” pared to the tax-efficient corporate astonishing rate,” he says. “The lancing clients on why IP is a neces- ance at law firm RPC. “We are seeing a and evolving risks arising out of these takes a keen interest in.” ically afforded three months’ paid Alarmed but curious to explore rate. No wonder uptake in insurance transition has happened so quickly sity and not just a ‘nice to have’.” series of new and evolving risks that are global megatrends,” he adds. The industry needs urgently to exam- sick leave by his corporate employer, this worrying comment, Beilin cover for freelancers has been so poor that an insurance lag has developed, hard to quantify in traditional ways.” “Insurers talk about the importance of ine how these megatrends might affect starting a business from scratch soon learnt the scale of vulnera- and people are willing to risk living whereby traditional market players’ Insurance, as a business, demands making evidence-based decisions. These its portfolio of risks and keep an eye for gig workers was the last thing on his mind. bility facing a growing number of without that financial safety net.” rigid policies are unable to match a wealth of data to be profitable. You megatrends are changing the nature, out for new ones on the horizon. Will, Yet as self-employed well-wishers Providing reasonably priced insur- this fast-moving industry.” can, of course, insure anything from an frequency or severity of insured events. for example, the law around mental expressed their envy at his financial ance cover for freelancers is crucial However, the meshing of two ver- alien abduction to a skydiving nonage- The data insurers have to hand does not health develop in such a way as to The exponential rise of the freelance situation, and it became clear inex- for businesses in particular and soci- ticals – the shift towards a freelance narian, but such one-off events are a necessarily help them to understand introduce a new megatrend? pensive insurance cover for free- ety in general, given how rapidly the workforce, plus the ability to dis- Insurance products specialist side of the industry. Setting that changing risk. Take the bush fires; Not surprisingly, those who best workforce is a much-discussed trend across lancers didn’t exist, Beilin identified make-up of the workforce has trans- tribute and engage people on digi- the right premium generally relies on there have been bush fires for years, but understand the uncertainties as they a protection gap that he felt duty- formed in the last decade. Indeed, tal platforms – has forged an excit- should be adapted an in-depth understanding of the cus- how will the frequency and severity be evolve will be best placed to deliver sus- the globe, but is enough being done to protect bound to narrow. the Association of Independent ing chance for those progressive when new markets tomer, the product and the probability amplified by climate change?” tainable underwriting profits. That may “It was only after some freelance Professionals and the Self-Employed and agile enough to take advantage. of insured events occurring. Insurers are experts at assessing prob- well mean a forensic re-examination of those who don't have cover? friends visited me that I realised 93% (IPSE) estimates the number of free- The sluggishness of market incum- emerge, but the most An underwriter assessing risk will abilities, but the present age of disrup- contracts; “standard” clauses may need the extent of my good fortune,” says lancers in the UK has surged by 35 bents has accelerated the emer- be looking to the past for that under- tion can make it hard to understand to be revised or new products devel- the co-founder and chief executive per cent since 2009. Consider that gence of nimble insurtechs, such prominent players standing; without a reliable data set claim trends. In some cases, the law is oped to meet new challenges. Insurers of Collective Benefits. “The penny of freelancers lack any IP, health or the solo self-employed market con- as Collective Benefits, Digital Risks behind it, risk assessment becomes playing catch up. It has taken two years will need to innovate to stay ahead of the critical illness cover are laggards dropped when one said, ‘You are so tributed a whopping £275 billion to and many others, looking to offer considerably more difficult. already for the UK courts to weigh the game in a digitally transformed world. lucky. If I had time off work because Doteveryone 2020 the UK economy in 2018. freelance insurance that is spe- But underwriters are now having to evidence on whether supermarket chain Despite the overflowing data pools that cialised, personalised, flexible and cope with a rapidly changing world that Morrisons is vicariously liable for the are being produced by new technol- wide-ranging, at a reduced cost. actions of a rogue employee who pub- ogy, insurers are wrestling with a series “There are great opportunities for Rallying for a more joined-up lished sensitive staff details online and of unknown unknowns. It is time to take the insurance sector to refresh its approach, and collaboration between the final decision is not expected until stock of the portfolio of risks your busi- approaches and offerings to serve the insurtechs, more traditional pro- later this year. ness covers and ensure you understand this growing self-employed market,” viders and the government, Bryan Uncertainty such as this is often the impact of these megatrends. says Freddy Macnamara, founder adds: “Ultimately, advice is what is resolved by legal disputes or changing and chief executive of Cuvva, which going to make the difference and will It is time to take regulation. In the meantime, how do has been offering flexible car and be the driving force behind how the stock of the portfolio insurers assess and price the risks of that For more information please visit travel insurance through its mobile freelance insurance marketplace will kind of data breach? www.rpc.co.uk application since 2017. “Innovative look in five years.” of risks your business Or take the issue of “silent cyber”, startups are stepping up to the chal- Given the record number of covers and ensure whereby an insurer may have to pay lenge, building flexible, short-term self-employed workers looks certain out on cyber losses under a policy not products, filling a gap between com- to continue rising in the coming you understand the designed for that purpose. The cyber mercial and personal insurance. decade, it makes sense for everyone impact of these risk arising out of the technology meg- “The flexibility of short-term in society that education and advice atrend has arguably caught out insurers insurance that can be switched on is provided as soon as possible. megatrends and the markets are now taking steps 06 FUTURE OF INSURANCE RACONTEUR.NET 07 Commercial feature Chief marketing officer

Historically, insurers did not engage directly with customers. But general expectations of more personalised products and easy-to- Alvin Mahmudov/Unsplash Alvin

use services, on top of the disrup- Podilnyk/Unsplash Andriyko TALENT SaaS in the city tion to traditional business models generated by insurtechs, are inevitably generating change. From helping to alleviate the upgrade burden, to engaging in a As part of this shift, the role of the chief marketing officer (CMO) modern commercial conversation with customers, Duck Creek Five key roles is becoming increasingly vital not only to build a strong company Technologies managing director for Europe Bart Patrick spells out brand, but also to be the “voice of the customer”, says Claire Sadler, how leveraging software as a service supports insurers’ strategies, shaping the marketing director at insurer rather than dictating them Direct Line for Business. Being this voice involves “making sure customers are understood, and their 1customer landscape and respond is becoming increasingly popular to using sustainability metrics4 and the Chief sustainability future of needs are known and represented quickly enough to new challenges bring in fresh thinking”. officer social, environmental and financial ere we are, at the dawn of a Layers of legacy in business decisions, from product and opportunities, which includes Over the next five years, he also triple bottom line.” H new decade, but for far too Indeed, the majority of respondents to a development to the service experi- employing cutting-edge marketing expects to see a rise in the number During the next few years, exist- But CSO positions are still few many re/insurers the tech- recent independent survey of more than ence”, she explains. technology effectively. As a result, of currently rare chief customer ing corporate social responsibility and far between. For example, nology deployed as they enter 2020 is 100 senior insurance executives charac- Without wholesale insurance A key challenge for many estab- says Gates, recruiting people from officer roles as customers progres- (CSR) leadership roles are expected industry giant AIG only appointed frighteningly similar, if not the same, terised their IT infrastructure as consist- lished CMOs, however, is being “more customer-centric sectors, sively move to the heart of insur- to morph into those of chief sustain- its first CSO last July to develop to the tech they were using when they ing of multiple legacy systems operating systems change, able to adapt to the fast-changing such as retail banking and telecoms, ers’ businesses. ability officer (CSO). The difference and implement an enterprise-wide were partying like it was 1999. across a host of different IT vendors and The many changes affecting the insurance sector between the two is one of depth, sustainability strategy, cover- Anyone who has worked at a large, often falling behind with upgrades. companies risk with sustainability being less about ing everything from insurance well-established insurer knows this is In particular, it was clear that systems getting stuck in a make it an exciting destination for graduates from individual projects and more about and investment activities to its not an exaggeration. Many insurance upgrades and maintenance can cause cycle of bolting a variety of backgrounds, so what are providers This momentum led to the some- internal change at a systemic level, approach as an employer. enterprises are running layers of out- a huge drag on the efficiency of a busi- what belated arrival of the chief data says Kelly Coombes, founder of con- “There’s a lot of movement going dated technology and too many highly ness and regularly impact the working on new layers of doing about it? officer (CDO) role into the insur- sultancy Climate Risk Solutions. on in the wider commercial econ- skilled back-office teams are currently life of staff, in some instances causing ance sector about 18 months ago, “CSR was the starting point, but omy and customers, employees and mired in “just keeping the lights on”, a major disruption across an enterprise. technology although in some instances, it has having a CSR officer was mainly investors are all looking for compa- time-intensive and expensive process And with the costs of upgrading been rolled into the more traditional a nice-to-have that looked good nies to be more socially responsi- that adds to already significant techni- enterprise-wide from one system to Christina Woc/Unsplash Christina chief technology officer (CTO) posi- in an annual report,” she says. ble,” says Coombes. “So the insur- cal debt accumulations. another all too frequently exceeding Cath Everett tion due to the close link between “Organisations are now realis- ance sector will have to change, but This scenario results in more frequent €500,000 or even €1 million, this is not solutions, including geolocation, MVR the two disciplines. ing, however, that there are com- many of those conversations just system downtime and a lack of interop- a small change for any business. (motor vehicle records) lookups, vehi- While in the past, such roles were mercial benefits to be gained from aren’t taking place yet.” erability that makes other inefficiencies In fact, 91 per cent of senior insur- cle data pre-fill, e-signature and more. raditionally, graduates To do so has meant turning to viewed simply as offering support almost unavoidable, constituting a mas- ance respondents to the survey admit- We’re also continuously adding new T have not considered the technology and the clever use of services to the business, they are sive expense and drain on resources for ted that out-of-date IT systems created solution partners. A good example is insurance industry as a data, not least to keep the potential now considered of growing strate- the sector when it comes to upgrades. inefficiencies and costs that ultimately our relationship with Cytora, an ecosys- go-to career destination. Generally threat posed by insurtechs at bay. gic importance, not least to ena- the insured – that’s you and me – have tem partner powered by artificial intel- viewed as staid and lacking in inno- Adam Gates, head of recruitment ble innovation, explains Steve to pay for. ligence, which enables our customers to vation, it has neither been seen consultancy Odgers Interim’s Woodford, CTO of BGL Group, a access a wealth of information about a as sexy nor positioned as offering insurance practice, believes such digital distributor of insurance and Step-change for the industry commercial property with just a few key lucrative job opportunities. dynamics will result in the “insur- domestic financial services. It’s clear the eradication of the variables, doing away with those seem- But things are changing. Since ers of the future looking and feel- “The CDO/CTO role is now pivotal £1m upgrade burden would constitute one ingly endless question sets normally the 2008 recession, customers have ing much more like modern retail to the success of any organisation Brown/Unsplash Tamarcus cost of performing an of the biggest steps forward in insur- associated with commercial property, become less loyal, more price sensi- banks”. This means their oper- in the insurance sector and I can’t enterprise-wide upgrade of one ance operations. Upgrades are hold- while increasing accuracy too. tive and more likely to shop around ations will become increasingly Chief data officer data more strategically2 with the think of a single aspect of any ser- version of a system to the latest ing insurers back from innovating, but And another of our ecosystem part- using price comparison websites. As digitalised and transparent, with help of new technology, such as vice offered to customers that isn’t version, according to 20 per cent without wholesale systems change, ners, FRISS, dovetails with Duck Creek a result, many insurers, particularly the focus on mechanisms such The shift to a more customer- machine-learning. The aim is to materially impacted by it,” he says. of all respondents companies risk getting stuck in a cycle in claims, providing fraud prevention on the general and life insurance as loyalty schemes to attract and centric business model, plus a improve everything from product “Using data to best effect to serve of bolting on new layers of technol- technology that is impacting directly on side, have had to become more cus- retain customers. desire not to be left behind by dig- innovation and customer acqui- customers, ensure they get the best ogy, essentially akin to rearranging the combined ratios. tomer focused to compete in ways But which are the roles shaping the ital startups, has resulted in a sition and retention to risk and prices and a personalised service is cornflakes in a box of cereal. that were unnecessary before. future of the insurance industry? growing focus on how to employ investment decision-making. increasingly how we compete.” In contrast, software as a service Designed for change 90%+ (SaaS) enables faster upgrades that Our SaaS offering, Duck Creek provide insurers with the latest fea- OnDemand, is built for insurance and tures and functionality and provides designed for change. We provide insur- of respondents agreed out-of-date greater speed and agility to meet evolv- ers with faster upgrades, end-to-end IT systems create inefficiencies and Chief talent/diversity ing customer needs. support, productised third-party inte- costs that ultimately the insured HOW SKILLS SHORTAGES ARE AFFECTING GROWTH and inclusion officer have to pay for But the SaaS model goes way beyond grations, reduced implementation time- simply hosting software in the cloud. lines and risk, high scalability and per- Global survey of insurance professionals A key means of generating change Stil/Unsplash 5 By providing a set of services and sup- formance optimisation, plus advanced in a traditional industry is for Chief investment officer says Gates. “This includes the need port, it enables a fundamentally new security and privacy that paves a path Our people costs are rising 64% organisations to broaden their to ensure a watertight strategy, but approach to competing in today’s forward to faster innovation. more than expected current talent pool and bring in Changing customer expectations also a governance and monitoring economy, one where technology sup- The bubble of layer upon layer of new people from a diverse range and the growing commercial structure to track the performance of 75% ports strategy rather than dictating it legacy systems that currently haunts We are not able to 50% of backgrounds. pressures posed by new market investments and the agility to reallo- and insurers are empowered to focus the insurance business may make com- innovative effectively Miriam Earley, global head of entrants in the shape of insurtechs cate where necessary.” on innovation in entirely new ways. panies feel safe because it maintains diversity and inclusion (D&I) at pro- are making the insurance sector Other influences include the reported that their IT systems When combined with technology the status quo, but it’s not safe. It’s very Our quality standards had fallen behind with upgrades, and/or customer 48% fessional services group Marsh & extremely competitive. rise of activist investors, who are despite having service level built on an open platform, which pro- fragile. Bubbles burst. experience are impacted McLennan, explains: “To deal with Moreover, the challenges faced applying increasing levels of pres- agreements in place with vendors vides access to pioneering insurtech It’s time insurers assessed their tech- an era of disruption and fast-paced by companies, particularly in pen- sure on companies’ investment partners in the broader ecosystem via nology risk with the same eye they use We are missing our 38% change, there’s a need for different sions, and general and life insur- strategies. As a result, to cope more application programming interfaces to assess the risks they underwrite. growth targets ways of thinking as traditional ways ance cover, due to the impact of an effectively with such dynamics, a (APIs), carriers can realise significant SaaS redefines IT risk and the nature of of approaching work, clients and ageing population on policies, are number of chief investment officer operational efficiencies. safety. Change is the new safe. Change We are unable to pursue % organisational strategy may simply leading to market consolidation. For roles have sprung up over the last An ecosystem is typically defined as is modern. Be modern. a market opportunity 26 not be right any more.” 3inclusion aspect involves embed- can bring to the table nor what they many businesses, the aim is to grow few years, although they are yet to 75%+ an inter-relationship of offerings in a But while the head of D&I role is ding change into organisational actually want from them. by acquisition rather than rely on become widespread. common market and our mission at We cancelled or delayed 8% already quite widespread, among processes ranging from recruitment Although traditional industries, organic growth. Into the future though, Gates Duck Creek is to build the most dynamic For more information please visit a key strategic initiative were not confident in their larger organisations at least, it is an to talent management. such as insurance, are at earlier “Given how competitive the insur- expects to see this “increasingly and valuable partner ecosystem for the www.duckcreek.com current IT systems’ ability to area that is still evolving. While the However, for most insurers there stages of the journey, says Earley, she ance market is, the need for astute scrutinised and regulated role” support growth strategies insurance industry. No impact 6% diversity element is about broad- is still some way to go, not least expects the breadth and influence asset and capital allocation strategies work very closely with the CSO to For instance, we’ve built productised ening the net to increase members because they often neither fully of the role as a catalyst for change to that ensure risk-mitigated invest- “co-ordinate sustainable invest- www.duckcreek.com/upgrades-report integrations to the most commonly PwC 2019 of under-represented groups, the understand what D&I professionals grow over the coming years. ments is growing significantly,” ment portfolios”. Are Upgrades Holding Insurers Back? used insurance data and services 06 FUTURE OF INSURANCE RACONTEUR.NET 07 Commercial feature Chief marketing officer

Historically, insurers did not engage directly with customers. But general expectations of more personalised products and easy-to- Alvin Mahmudov/Unsplash Alvin

use services, on top of the disrup- Podilnyk/Unsplash Andriyko TALENT SaaS in the city tion to traditional business models generated by insurtechs, are inevitably generating change. From helping to alleviate the upgrade burden, to engaging in a As part of this shift, the role of the chief marketing officer (CMO) modern commercial conversation with customers, Duck Creek Five key roles is becoming increasingly vital not only to build a strong company Technologies managing director for Europe Bart Patrick spells out brand, but also to be the “voice of the customer”, says Claire Sadler, how leveraging software as a service supports insurers’ strategies, shaping the marketing director at insurer rather than dictating them Direct Line for Business. Being this voice involves “making sure customers are understood, and their 1customer landscape and respond is becoming increasingly popular to using sustainability metrics4 and the Chief sustainability future of needs are known and represented quickly enough to new challenges bring in fresh thinking”. officer social, environmental and financial ere we are, at the dawn of a Layers of legacy in business decisions, from product and opportunities, which includes Over the next five years, he also triple bottom line.” H new decade, but for far too Indeed, the majority of respondents to a development to the service experi- employing cutting-edge marketing expects to see a rise in the number During the next few years, exist- But CSO positions are still few many re/insurers the tech- recent independent survey of more than ence”, she explains. technology effectively. As a result, of currently rare chief customer ing corporate social responsibility and far between. For example, nology deployed as they enter 2020 is 100 senior insurance executives charac- Without wholesale insurance A key challenge for many estab- says Gates, recruiting people from officer roles as customers progres- (CSR) leadership roles are expected industry giant AIG only appointed frighteningly similar, if not the same, terised their IT infrastructure as consist- lished CMOs, however, is being “more customer-centric sectors, sively move to the heart of insur- to morph into those of chief sustain- its first CSO last July to develop to the tech they were using when they ing of multiple legacy systems operating systems change, able to adapt to the fast-changing such as retail banking and telecoms, ers’ businesses. ability officer (CSO). The difference and implement an enterprise-wide were partying like it was 1999. across a host of different IT vendors and The many changes affecting the insurance sector between the two is one of depth, sustainability strategy, cover- Anyone who has worked at a large, often falling behind with upgrades. companies risk with sustainability being less about ing everything from insurance well-established insurer knows this is In particular, it was clear that systems getting stuck in a make it an exciting destination for graduates from individual projects and more about and investment activities to its not an exaggeration. Many insurance upgrades and maintenance can cause cycle of bolting a variety of backgrounds, so what are providers This momentum led to the some- internal change at a systemic level, approach as an employer. enterprises are running layers of out- a huge drag on the efficiency of a busi- what belated arrival of the chief data says Kelly Coombes, founder of con- “There’s a lot of movement going dated technology and too many highly ness and regularly impact the working on new layers of doing about it? officer (CDO) role into the insur- sultancy Climate Risk Solutions. on in the wider commercial econ- skilled back-office teams are currently life of staff, in some instances causing ance sector about 18 months ago, “CSR was the starting point, but omy and customers, employees and mired in “just keeping the lights on”, a major disruption across an enterprise. technology although in some instances, it has having a CSR officer was mainly investors are all looking for compa- time-intensive and expensive process And with the costs of upgrading been rolled into the more traditional a nice-to-have that looked good nies to be more socially responsi- that adds to already significant techni- enterprise-wide from one system to Christina Woc/Unsplash Christina chief technology officer (CTO) posi- in an annual report,” she says. ble,” says Coombes. “So the insur- cal debt accumulations. another all too frequently exceeding Cath Everett tion due to the close link between “Organisations are now realis- ance sector will have to change, but This scenario results in more frequent €500,000 or even €1 million, this is not solutions, including geolocation, MVR the two disciplines. ing, however, that there are com- many of those conversations just system downtime and a lack of interop- a small change for any business. (motor vehicle records) lookups, vehi- While in the past, such roles were mercial benefits to be gained from aren’t taking place yet.” erability that makes other inefficiencies In fact, 91 per cent of senior insur- cle data pre-fill, e-signature and more. raditionally, graduates To do so has meant turning to viewed simply as offering support almost unavoidable, constituting a mas- ance respondents to the survey admit- We’re also continuously adding new T have not considered the technology and the clever use of services to the business, they are sive expense and drain on resources for ted that out-of-date IT systems created solution partners. A good example is insurance industry as a data, not least to keep the potential now considered of growing strate- the sector when it comes to upgrades. inefficiencies and costs that ultimately our relationship with Cytora, an ecosys- go-to career destination. Generally threat posed by insurtechs at bay. gic importance, not least to ena- the insured – that’s you and me – have tem partner powered by artificial intel- viewed as staid and lacking in inno- Adam Gates, head of recruitment ble innovation, explains Steve to pay for. ligence, which enables our customers to vation, it has neither been seen consultancy Odgers Interim’s Woodford, CTO of BGL Group, a access a wealth of information about a as sexy nor positioned as offering insurance practice, believes such digital distributor of insurance and Step-change for the industry commercial property with just a few key lucrative job opportunities. dynamics will result in the “insur- domestic financial services. It’s clear the eradication of the variables, doing away with those seem- But things are changing. Since ers of the future looking and feel- “The CDO/CTO role is now pivotal £1m upgrade burden would constitute one ingly endless question sets normally the 2008 recession, customers have ing much more like modern retail to the success of any organisation Brown/Unsplash Tamarcus cost of performing an of the biggest steps forward in insur- associated with commercial property, become less loyal, more price sensi- banks”. This means their oper- in the insurance sector and I can’t enterprise-wide upgrade of one ance operations. Upgrades are hold- while increasing accuracy too. tive and more likely to shop around ations will become increasingly Chief data officer data more strategically2 with the think of a single aspect of any ser- version of a system to the latest ing insurers back from innovating, but And another of our ecosystem part- using price comparison websites. As digitalised and transparent, with help of new technology, such as vice offered to customers that isn’t version, according to 20 per cent without wholesale systems change, ners, FRISS, dovetails with Duck Creek a result, many insurers, particularly the focus on mechanisms such The shift to a more customer- machine-learning. The aim is to materially impacted by it,” he says. of all respondents companies risk getting stuck in a cycle in claims, providing fraud prevention on the general and life insurance as loyalty schemes to attract and centric business model, plus a improve everything from product “Using data to best effect to serve of bolting on new layers of technol- technology that is impacting directly on side, have had to become more cus- retain customers. desire not to be left behind by dig- innovation and customer acqui- customers, ensure they get the best ogy, essentially akin to rearranging the combined ratios. tomer focused to compete in ways But which are the roles shaping the ital startups, has resulted in a sition and retention to risk and prices and a personalised service is cornflakes in a box of cereal. that were unnecessary before. future of the insurance industry? growing focus on how to employ investment decision-making. increasingly how we compete.” In contrast, software as a service Designed for change 90%+ (SaaS) enables faster upgrades that Our SaaS offering, Duck Creek provide insurers with the latest fea- OnDemand, is built for insurance and tures and functionality and provides designed for change. We provide insur- of respondents agreed out-of-date greater speed and agility to meet evolv- ers with faster upgrades, end-to-end IT systems create inefficiencies and Chief talent/diversity ing customer needs. support, productised third-party inte- costs that ultimately the insured HOW SKILLS SHORTAGES ARE AFFECTING GROWTH and inclusion officer have to pay for But the SaaS model goes way beyond grations, reduced implementation time- simply hosting software in the cloud. lines and risk, high scalability and per- Global survey of insurance professionals A key means of generating change Stil/Unsplash 5 By providing a set of services and sup- formance optimisation, plus advanced in a traditional industry is for Chief investment officer says Gates. “This includes the need port, it enables a fundamentally new security and privacy that paves a path Our people costs are rising 64% organisations to broaden their to ensure a watertight strategy, but approach to competing in today’s forward to faster innovation. more than expected current talent pool and bring in Changing customer expectations also a governance and monitoring economy, one where technology sup- The bubble of layer upon layer of new people from a diverse range and the growing commercial structure to track the performance of 75% ports strategy rather than dictating it legacy systems that currently haunts We are not able to 50% of backgrounds. pressures posed by new market investments and the agility to reallo- and insurers are empowered to focus the insurance business may make com- innovative effectively Miriam Earley, global head of entrants in the shape of insurtechs cate where necessary.” on innovation in entirely new ways. panies feel safe because it maintains diversity and inclusion (D&I) at pro- are making the insurance sector Other influences include the reported that their IT systems When combined with technology the status quo, but it’s not safe. It’s very Our quality standards had fallen behind with upgrades, and/or customer 48% fessional services group Marsh & extremely competitive. rise of activist investors, who are despite having service level built on an open platform, which pro- fragile. Bubbles burst. experience are impacted McLennan, explains: “To deal with Moreover, the challenges faced applying increasing levels of pres- agreements in place with vendors vides access to pioneering insurtech It’s time insurers assessed their tech- an era of disruption and fast-paced by companies, particularly in pen- sure on companies’ investment partners in the broader ecosystem via nology risk with the same eye they use We are missing our 38% change, there’s a need for different sions, and general and life insur- strategies. As a result, to cope more application programming interfaces to assess the risks they underwrite. growth targets ways of thinking as traditional ways ance cover, due to the impact of an effectively with such dynamics, a (APIs), carriers can realise significant SaaS redefines IT risk and the nature of of approaching work, clients and ageing population on policies, are number of chief investment officer operational efficiencies. safety. Change is the new safe. Change We are unable to pursue % organisational strategy may simply leading to market consolidation. For roles have sprung up over the last An ecosystem is typically defined as is modern. Be modern. a market opportunity 26 not be right any more.” 3inclusion aspect involves embed- can bring to the table nor what they many businesses, the aim is to grow few years, although they are yet to 75%+ an inter-relationship of offerings in a But while the head of D&I role is ding change into organisational actually want from them. by acquisition rather than rely on become widespread. common market and our mission at We cancelled or delayed 8% already quite widespread, among processes ranging from recruitment Although traditional industries, organic growth. Into the future though, Gates Duck Creek is to build the most dynamic For more information please visit a key strategic initiative were not confident in their larger organisations at least, it is an to talent management. such as insurance, are at earlier “Given how competitive the insur- expects to see this “increasingly and valuable partner ecosystem for the www.duckcreek.com current IT systems’ ability to area that is still evolving. While the However, for most insurers there stages of the journey, says Earley, she ance market is, the need for astute scrutinised and regulated role” support growth strategies insurance industry. No impact 6% diversity element is about broad- is still some way to go, not least expects the breadth and influence asset and capital allocation strategies work very closely with the CSO to For instance, we’ve built productised ening the net to increase members because they often neither fully of the role as a catalyst for change to that ensure risk-mitigated invest- “co-ordinate sustainable invest- www.duckcreek.com/upgrades-report integrations to the most commonly PwC 2019 of under-represented groups, the understand what D&I professionals grow over the coming years. ments is growing significantly,” ment portfolios”. Are Upgrades Holding Insurers Back? used insurance data and services 08 FUTURE OF INSURANCE RACONTEUR.NET 09 Commercial feature

in banking, it’s still a major concern for to adapt their talent capacity and pre- companies. Certain areas of the insur- pare a workforce for the future. OPINION ance market, including life insurance, Companies that overlook the talent tend to be very opaque, making it diffi- and mindset shifts needed to stay con- cult for customers to understand what nected to their customers’ evolving they’re buying. Regulators are trying needs risk being blinded by digital. This is to drive more transparency and fair- where partnerships are providing further Diversity ness. The Financial Conduct Authority’s value to incumbents. Collaborating with recent review of home and motor insur- startups brings more than cutting-edge ance found that loyal customers can pay products and services, it also brings far more for the same risk than newer the skilled people who can develop and and disruption customers. The same review found six maintain them and provide a fresh take million customers could save £1.2 billion on how to meet customer expectations. if they paid average premiums instead. PwC’s latest Global CEO Survey shows Savvy insurers are seeing an opportu- that, following an initial period of fearing Ahead of Insurtech Insights Europe next month, Bradley Collins and nity to get on the front foot to increase digital disruption, insurance chief exec- loyalty or take market share. Saga, for utives are increasingly positive about the Ellenie Chan call for a fresh approach to hiring and people management example, has launched a three-year future. Rather than feeling threatened by fixed car insurance product, providing technology and worried about how they to supercharge disruptive growth in the insurance industry the clarity and simplicity consumers can work in harmony with it, they are now desire. Others are embracing flexible thinking about how they can work collab- models such as pay-as-you-drive car oratively with startups to increase their ow many schoolchildren holidays or protect their family employees expect their leaders to s with wider financial ser- coverage, and startups such as Anorak digital capability, as well as grow revenue H dream of working in insur- should be rewarding for people speak out on a range of well-mean- A vices, the insurance indus- are releasing clear and tiered offer- and access new markets. ance? I don’t claim to have with this mindset. ing topics, two of which stand out try doesn’t score well on ings with no hidden fees or charges. AIG, for example, has partnered with the latest figures, but I would hazard With the huge demand for STEM for me: training for jobs of the future diversity and inclusion (D&I). While By responding to customers’ demands, online mortgage broker Habito, recog- a guess it’s not many. (science, technology, engineering and ethical use of technology. the situation is improving at nearly companies are identifying ways to take nising opportunity because getting a Personally, my tennis abilities led and maths) talent in the industry, Insurtech investment has hit a all levels, the Association of British It takes an a lead in sub-sectors of insurance, mortgage is a common decision point me to believe I would one day go on every insurer should be plough- record high and it’s safe to say that Insurers (ABI) recently revealed that driving industry convergence and new at which people also purchase life insur- to triumph at Wimbledon, but life ing resources into a recruitment companies are genuinely offering jobs female representation at board level inclusive and opportunities for growth. ance. When applying online through took a different turn. The dreams strategy. Currently, this talent is at the cutting edge of futuristic devel- has only increased by a negligible 1 “Customers have previously been Habito, customers are asked if they’ve and ambitions of young people are attracted by tech companies like opment. Also, if we boil down what per cent, with women still account- empowered Blending people most influenced by price and while considered getting life insurance and are far-reaching and while we know a Google, Facebook, Amazon and insurance is, at its core essence it pro- ing for just one in five jobs. that’s still important, we’re seeing a sig- posed nine simple questions to do so. job in insurance can be stimulating other prominent names in the tech- tects the world and the people within Despite three quarters of organi- nificant resurgence of brand value and “The outlook of insurers has argu- and challenging, it's unlikely to lead nology sector. These companies it. It gives people freedom. That’s a sations having a D&I strategy, rep- staff culture service quality in decision-making,” ably never been as positive, provid- to personal fame and stardom. promote an enjoyable culture and pretty ethical use of technology. resentation from the BAME (black, and technology to says Christine Korwin-Szymanowska, ing they can embrace the opportu- But how many senior industry the opportunity to work on cut- The industry can do a far greater Asian and minority ethnic) commu- to execute partner in PwC’s Strategy& business. nity that disruption presents, and leaders can honestly say they have ting-edge projects. job at marketing itself to appeal to nity dropped from 15 to 13 per cent. “That’s good for some of the incum- evolve their workforce,” says Bichard. pulled out all the stops to make the Why would this talent choose students and grads, based on these However, this is not another high-valued, bents, but also adjacent players such “Transformation needs to happen, but sector an attractive prospect? to enter the world of insurance? It two factors alone. polemic targeting industry leaders transform insurance as retailers or consumer brands. the crucial element is talent. How do This is not a criticism of the sec- should be a consideration because While large insurers and smaller or resorting to stereotypes about old novel and Differentiating based on claims ser- you take your people with you? How tor. I believe the insurance indus- there is a diverse range of opportu- insurtech startups might not imme- white men. At Insurtech Insights, As customers continue to demand a heightened digital experience, successful vice and after care is likely to be more do you think about digital upskilling try makes a positive contribution nities that fall under the insurtech diately seem glamorous companies we recognise the need for leaders important than pricing, so insurance and the workforce of the future? Using every day to improve the lives of umbrella and more created all the to work for, especially compared to to drive growth and growth comes personalised insurers will be those that collaborate openly and combine their focus on a firms need to prepare for that.” our knowledge of the global market, we ordinary people. time as the industry undergoes seri- the casual trainers and tees dress from positive action. While technology is vital to enhanc- help our insurance clients understand There are a number of positives ous disruption through innovation. code and ping pong tables offered by Aside from the altruism of creating insurance new business model, technology and people, rather than any one in isolation ing transparency, removing barriers to what transformation really means to that should appeal to the mod- I think insurers can do much bet- big tech companies, let’s not under- opportunities for those who may not buying and enabling the experience deliver value; we support them from ern sensibilities of the young job- ter in drawing on the emotive aspect sell our great industry. have had them, there is a raft of busi- that customers crave, transformation strategy all the way to execution.” seeker which we should promote, of what they do to appeal to the It’s an exciting time for the insur- ness benefits arising from a diverse products will not succeed unless it places people for instance a focus on mindful- millennial generation who deeply ance sector. Leaders should be tak- and inclusive workplace culture. nsurance may be one of the Historically, small and medium-sized technology monitors global flight dis- at its heart. However, keeping up with For more information please visit ness, health and wellbeing is high care about the world they live in. ing steps to supercharge growth by These include increased productiv- and services I world’s oldest industries, but enterprises have sought advice on ruptions in real time on a suite of prod- changing talent requirements is the pwc.co.uk/currency-collision/ on their agenda. Providing peace The 2020 Edelman Trust Barometer evolving culture and archaic tradi- ity, creativity and innovation, which it is as prone to disruption as insurance through brokers and inter- ucts that enable travellers to claim on most difficult challenge of all, requir- insurance of mind to help people enjoy their discovered that 92 per cent of tions, while simultaneously promot- add up ultimately to profitability. any other. For the first time, consum- mediaries. In recent years, however, their insurance policy without the ing not only a willingness from staff to ing the ethics that already sit at the Higher representation of women ers and businesses alike are demanding this has changed significantly, as small inconvenience of submitting proof invest in themselves and embrace a heart of the industry, to attract the in C-suite-level positions results in Ellenie Chan digitally enabled products with more business owners have increasingly that a flight was cancelled or delayed. different way of working, but also an finest talent out there. 34 per cent greater returns to share- Chief content officer transparency, flexibility and fairer pric- wanted to purchase insurance in the There are clear benefits for collabo- understanding from companies of how holders; companies with above aver- Insurtech Insights ing. To compete, insurance incum- same way as they buy their own per- rative insurtechs too, providing access age diversity had 19 per cent higher bents need to evolve their workforce sonal cover, on their mobile or desk- not only to large customer groups, but innovation revenues; and racially and strike partnerships with both new top devices, with a digital experience. also the brand equity that companies diverse teams have been shown to entrants and adjacent players in a more They want to make claims and get reim- have spent decades building. In insur- outperform non-diverse teams by for inclusion of LGBT+ (lesbian, gay, open, collaborative ecosystem. bursed in the same way too. ance, perhaps more so than any other 35 per cent. Add to this the reputa- bisexual, transgender/transsexual The situation is similar in the life insur- industry, customers seek brands they tional benefit to your brand and the plus other groups). That’s a good ance market, where independent finan- know and trust. John Lewis and Marks appeal to a wider pool of talent, and step and it’s heartening to witness cial advisers (IFAs) may still be a firm fix- & Spencer are examples of two com- 75% 75% it all makes sense. the increase in awareness of the ture, but a growing number of people are panies that have leveraged their brand The industry The consumer-base is becoming need for D&I initiatives and the det- more comfortable transacting online. recognition to drive success in the of UK CEOs believe their upskilling and of UK CEOs increasingly diverse and it takes a riment of a uniform workforce. Closing the life insurance gap – half of insurance space. programmes are effective in believe it can do a far diverse management team to set clear The world is changing and so is the adults have never bought life insurance, “A lot of traditional players may have supporting innovation and will increase strategic business goals to address a insurance industry. If the incum- The outlook of a recent PwC Currency of Collision survey resisted this direction for a while, but accelerated digital transformation business growth greater job wider group of consumers. It takes an bents don't keep up with the pace of found – and meeting the digital expecta- they’re now seeing the need to collab- inclusive and empowered staff culture change, they run the risk of becom- PwC CEO Survey 2020 insurers has arguably tions of those that do, requires trans- orate. The pace of change required to to execute high-valued, novel and per- ing irrelevant, losing market share to formation in the front and back office survive and indeed thrive in the mar- at marketing sonalised insurance products and ser- young, fast-paced, agile, digital-first never been as believe that over the next of insurance companies, and auto- ketplace is rapid,” says Jim Bichard, decade technology will vices for this group of consumers. insurers that really understand mation of both servicing policies and UK insurance leader at PwC. “Most itself to appeal Women control up to 80 per cent of their customers. We have made it positive, providing 56% change their current job processing claims. are only at the beginning of that all purchasing decisions and we're our mission to assist incumbents by they can embrace UK adults and Some new insurtech entrants have journey. Even if they are sev- UK 18-34 year olds to students excited to see women-led insurtechs bringing them together with their the opportunity that gained quick traction by capitalising eral years in, fundamentally say that they are disrupting the industry as they act startup peers to share learnings and on this demand for more customer- their business model is still ready to learn new with as an inspiration. We're excited to insight in March. disruption presents centric and digitally enabled services. pretty consistent with how it skills or completely believing that their and grads see and hear insurers speak more Having initially viewed them as a threat, has been for a long time. But retrain in order jobs will be significantly about D&I programmes to empower and evolve their to improve future insurance incumbents are now seek- working with those new entrants changed or obsolete as the workforce and executives. 67% employability – a result of automation workforce ing to develop innovative propositions and technologies can accelerate 29% The ABI research shows that 88 Europe's largest gathering of insur- only 11 per cent in collaboration with them. Manulife, transformation.” say they are not Bradley Collins per cent of companies now have an ance leaders and innovators returns 54% Jim Bichard for example, has partnered with Irish While customer switching is not per- Chief commercial officer executive sponsor for D&I and more to London at the Royal Lancaster, PwC UK Insurance Leader travel insurtech startup Blink, whose haps as prevalent in insurance as it is New World New Skills Survey, PwC 2019 Insurtech Insights than half have someone responsible March 17-18, 2020 08 FUTURE OF INSURANCE RACONTEUR.NET 09 Commercial feature

PROVIDER BENEFITS FROM INSURANCE PERSONALISATION

Survey of insurers offering advanced, personalised services PERSONALISED Earnix 2019 PREMIUMS The ability to offer insurance products tailored to each individual customer 89% 81% 75% 73% 61% 60% 60% is predicted to be commonplace in the coming years, according to research. Customer Customer Sales and marketing Customer comfort In-house Revenue per Broker channel And while the expectations of providers continue to grow, the benefits they engagement retention conversion rates with a purely online sales agent customer effectiveness will experience from value-added services could be transformative focus effectiveness

89% 77% 4% DRIVING SUPERIOR CUSTOMER EXPERIENCE CUSTOMER INTEREST IN NEW INSURANCE MODELS DISCONNECT BETWEEN WHAT CUSTOMERS WANT AND WHAT INSURERS OFFER Insurers ranked the top things most likely to reshape their customer experience Survey of both individuals and business customers of insurers expect that, believe that, in the future, all can currently adjust the Capgemini/Efma 2019 within five years, personalised insurers will have access to the individualised personalisation over the next five years Customers’ demands versus insurers’ offerings and level of readiness Individual Business insurance will be expected as a same data, and therefore the of product bundles in real standard practice quality of analytics will provide time, based on data from What customers want Capgemini/Efma 2019

the competitive edge connected devices 7% 51% 15% 19% What insurers are offering 59% 26% 36% 43% Earnix 2019 30% 41% 47% 35% 35% 34% 44%

MAIN WAYS INSURERS ARE 45% 21% 21% 50% 26% 27% 15% 15% 15% 16% 16% 35% 35% PERSONALISING PRODUCTS 29%

Level of personalisation insurers are 58% 58% 50% 37% 35%

currently able to deliver integration Digital Customer analyticsCustomer Artificial intelligence Proactive automation Proactive Service personalisation Natural voice interfaces voice Natural

38% automation process Robotic Segmentation based on demographics only Re-inventing the operating model operating the Re-inventing

4% Individualised personalisation adjusted in real time, based on 37% data from connected devices Segmentation based on behaviours of the Emerging technology systems, such as IoT and blockchain and IoT as such technology systems, Emerging individual consumer

21% Individualised personalisation (tailoring to an individual rather than a market)

Earnix 2019 Dimension Data/NTT 2019

CUSTOMER EXPECTATIONS OF PERSONALISATION

When insurers anticipate customers will expect individualised personalisation as standard Earnix 2019

Already happened 25%

Within one year 38%

Within two years 52%

Within three years 70%

Within five years 89%

Within ten years 96% insurance Usage-based insurance On-demand services value-added Proactive insurance Parametric insurance Peer-to-peer Microinsurance New insurance models services value-added Offer Capability tap to real-time customer data for use in risk modelling Initiatives educate to customers about new risks 10 FUTURE OF INSURANCE RACONTEUR.NET 11

PROVIDER BENEFITS FROM INSURANCE PERSONALISATION

the competitive edge connected devices 7% 51% 15% 19% What insurers are offering 59% 26% 36% 43% Earnix 2019 30% 41% 47% 35% 35% 34% 44%

MAIN WAYS INSURERS ARE 45% 21% 21% 50% 26% 27% 15% 15% 15% 16% 16% 35% 35% PERSONALISING PRODUCTS 29%

Level of personalisation insurers are 58% 58% 50% 37% 35%

currently able to deliver integration Digital Customer analyticsCustomer Artificial intelligence Proactive automation Proactive Service personalisation Natural voice interfaces voice Natural

38% automation process Robotic Segmentation based on demographics only Re-inventing the operating model operating the Re-inventing

21% Individualised personalisation (tailoring to an individual rather than a market)

Earnix 2019 Dimension Data/NTT 2019

CUSTOMER EXPECTATIONS OF PERSONALISATION

When insurers anticipate customers will expect individualised personalisation as standard Earnix 2019

Already happened 25%

Within one year 38%

Within two years 52%

Within three years 70%

Within five years 89%

app which provides additional ser- and ways of the insurance being vices and enhances the richness of its distributed and engineered,” says Enabling the new relationship with that target market. Hardcastle. “It goes back to something The insurance is seamlessly integrated we identified several years ago called into the app, as well as open banking ‘mass customisation’, which involves APIs (application programming inter- providers customising their offers, but age of insurance faces) that make it easy for the rental doing it at scale in a way that is efficient deposit process to be replaced by a financially. Now we’re starting to see different financial product. Canopy is companies delivering this. Whether they are incumbents or startups, insurance illustrative of a growing trend in insur- “Like any industry that goes through ance where interactions with con- periods of change, there are organisa- players embracing innovation and building products that sumers are enabled in different ways tions which are really embracing the meet the changing needs of customers will lead the way and the insurance product is inter- change and starting to change their twined to make it easier for people to ways of working. Blockbuster should live their lives. have come up with a subscription model Another startup that, via a pilot, is solution when they saw Netflix coming. he insurance sector has “Particularly at the consumer end, “So when we were doing the leveraging INSTANDA’s technology to The big car manufacturers should have T transformed in recent years there is a level of brand impact, loy- design-thinking around INSTANDA, we be able to approach the market in the been more proactive about electric from dipping its toes in the alty and psychological alignment that wanted to ensure we could enable any most agile and innovative way is Pikl, vehicles before Tesla came along. water when it comes to digitalisa- means it’s hard for any new arrival to kind of insurance to be distributed in a specialist insurance broker which “While we don’t necessarily think tion, trialling products that weren’t invest the billions of dollars required to any channel. That design-thinking has launched in 2018 with some big-name an upstart is going to disrupt insur- too expensive or obtrusive, to a clear scale in a meaningful way. Meanwhile, led us to a position where we’re work- backers. Pikl focuses entirely on the ance incumbents in a similar vein, we recognition that new business models incumbents are doing a good job of ing with some quite amazing compa- sharing economy, whose participants do think the winners will be those that and ways of engaging with customers flexing their models and becoming nies in different geographies across have different characteristics in terms adapt their models and become much are crucial. While insurtech startups more tuned into their marketplaces, multiple different insurance types.” of insurance products. more digital and flexible in their ways have been central to driving this real- which is where we can help.” One of those companies is Canopy, For short-term rentals, such as of doing business. isation through the traction they’ve INSTANDA’s no-code product a startup insurance firm addressing those booked through Airbnb and “We’re fortunate because we get gained, recently their influence has design platform is built on a pow- issues in the house rental market. HomeAway, homeowners may find that to work with companies that are been re-evaluated. erful set of insurance-specific cal- Rather than having to put six or eight their standard home insurance policy doing this and it’s why they choose Two to three years ago, startups such culations, processing and workflow weeks of rent down upfront as a is invalidated and any claims rejected, INSTANDA. The losers will be the ones as Trov and Lemonade were being her- capabilities that free companies deposit, which is often difficult for even if they only let a room or the whole that haven’t moved fast enough. alded as representing the emergence from high-cost legacy systems. people to fund, Canopy provides a property for a couple of nights. Pikl has Companies that haven’t moved of new business models and the defi- Using its software, organisations can unique insurance proposition that developed a suite of products that will quickly are still giving decent returns nition of how insurance should now amend rates, questions, documents acts in lieu of the deposit. House rent- fill this ‘insurance gap’ and run along- to shareholders and perhaps it’s going be thought about. Since then, how- and customer journeys in minutes, ers can pay for an insurance product side homeowners’ standard policies. to take 10 to 15 years before you start ever, Trov has pivoted and is provid- and new products can be launched that avoids them having to pay for an On the other end of the scale, insur- to see those organisations suffer- ing a service in collaboration with the in days. Return on investment is upfront deposit at all. ance giant Aviva has been working with ing. However, the companies that we large organisations in the industry. delivered in weeks via dramatically To meet the needs of millennials, INSTANDA to introduce innovative work with truly believe, unless they do Lemonade, meanwhile, a firm with a reduced product manufacturing, which make up a large proportion of new products in life and health cover. something now, they will lose out in huge valuation and significant hype underwriting and distribution costs, house renters, Canopy has built an The company carried out significant the next three to five years. behind it, still has to prove it will be and improved customer experience. research1 which revealed three in ten able to make a significant difference “When we were considering the small and medium-sized enterprises 1. Survey of 102 businesses with 1 to 9 employees, to the market at scale. technology needed to address some (SMEs) struggle to offer competitive carried out by Censuswide on behalf of Aviva, “Our hypothesis is there will defi- of the pain points in the industry, we benefits for their employees. With March 2019 nitely be more insurtech upstarts, abstracted ourselves from the vari- SMEs citing product cost and lack of but in terms of new entrants making ety of insurance products in differ- staff and resources to manage bene- For more information please visit a significant difference to the insur- ent geographies and with different fits as the two biggest barriers, Aviva instanda.com/request-a-demo ance market at scale, the jury’s still distribution models, and thought The winners will be those that has seen a gap to offer a flexible, highly out,” says Tim Hardcastle, founder and what is insurance actually about?” tailored, yet simplified, protection chief executive of INSTANDA, whose says Hardcastle. “Simplistically, it’s adapt their models and become insurance for small businesses. cloud software enables insurance about data and ingestion, some rules much more digital and flexible in “It’s fascinating for us to have a tech- firms to easily create, manage and dis- and then issuing a contract. It’s quite nology platform that can accommo- tribute their products. simple in that respect. their ways of doing business date very different business models 12 FUTURE OF INSURANCE RACONTEUR.NET 13 Commercial feature

CAR INSURANCE manufacturer. You would simply claim on your driverless car insurance in the same way as now,” he says. However, the 2018 legislation m is unlikely to be the last word 1.25 because of the complexities people worldwide are killed in road An uncertain accidents each year, equal to… involved with driverless cars. For one thing, there are varying types of self-driving cars. Many cars road towards a already have assisted-driving features, ranging from simple cruise control to lane-keeper assist, forward and rear collision warnings, 3,287 every day driverless future emergency braking and self-park- ing. But even the latest models still Association for Safe International Road Travel require drivers to pay attention How driverless technology will affect the car and take over steering, braking and accelerating when needed. insurance industry remains uncertain, but there One of the ABI’s main concerns is Dan Peate, founder of Avinew, a that the description of assisted-driv- California-based insurance technol- is no doubt providers will have to adapt ing systems “reflects their actual ogy company for driverless car own- capabilities and doesn’t mislead ers, believes legislation regarding owners into thinking they can sim- driverless car insurance will have to ply fall asleep on the back seat and evolve continuously. leave the rest to the car”, says Gerger. Peate, a former assistant vice presi- Anthony Beachey Development of fully autono- dent at the London financial services mous vehicles, which really would firm Aon, notes that “even when all allow every occupant to spend their cars are driverless, the owners of the riverless car technology about how the rollout of the technol- framework in terms of driverless journey reading a book or watch- cars will still need insurance for acts D promises to revolutionise ogy will affect insurance providers car insurance. ing TV, could take 30 to 40 years. of God, theft and so on”. the very mechanics of the and how business models will need “The ABI has worked very closely Meanwhile, there will be many dif- He explains: “If your car is parked motor insurance sector, not only by to adapt. with the government to ensure the ferent cars, with varying levels of in your driveway and a tree falls on dramatic improvements in safety, Not least, there is the question rollout of driverless technology autonomy, or no autonomy at all, on it during a storm, it’s a claim. Even but also how providers make, or of how to apportion liability for an works as smoothly as possible,” he the road at the same time. if your car is 100 per cent self-driv- don’t make, money. accident involving an automated says, adding that the development ing, someone could bump into it. app which provides additional ser- and ways of the insurance being The global toll on human life from vehicle. Is it the driver, if the car is of automated vehicles will deliver There are a whole series of things vices and enhances the richness of its distributed and engineered,” says road accidents is alarming, with not fully automated, the carmaker or significant safety benefits and that auto insurance would still do Enabling the new relationship with that target market. Hardcastle. “It goes back to something nearly 1.25 million people killed perhaps the supplier of the software should reduce the 1,700 fatalities on for you, even if tomorrow we had 100 The insurance is seamlessly integrated we identified several years ago called each year. That’s 3,287 every day, systems that enable automation? the UK’s roads every year. per cent driverless cars on the road.” into the app, as well as open banking ‘mass customisation’, which involves according to statistics from the The UK leads the world in answer- Gerger explains that the new legisla- The prospect of a decline in acci- APIs (application programming inter- providers customising their offers, but Association for Safe International ing the knotty question of how driv- tive framework is intended to ensure dents inevitably raises the question age of insurance faces) that make it easy for the rental doing it at scale in a way that is efficient Road Travel. erless cars will affect insurance, nothing changes from the custom- There are a whole series of things of how this will affect car insurers’ deposit process to be replaced by a financially. Now we’re starting to see And with around 90 per cent of according to Laurenz Gerger, policy er’s perspective. “If you are driving a profitability. Gerger says that while different financial product. Canopy is companies delivering this. accidents caused by human error, adviser at the Association of British car in automated mode and you are that auto insurance would still do the number of accidents could fall Whether they are incumbents or startups, insurance illustrative of a growing trend in insur- “Like any industry that goes through the promise of driverless cars will Insurers (ABI). Gerger says the involved in an accident, you won’t for you, even if tomorrow we had dramatically, the cost of replacing ance where interactions with con- periods of change, there are organisa- undoubtedly be transformative. Yet Automated and Electric Vehicles have to pursue a complicated, costly the expensive new technology that players embracing innovation and building products that sumers are enabled in different ways tions which are really embracing the there are still many uncertainties Act 2018 sets out a clear liability and lengthy process with the vehicle driverless cars on the road is increasingly being fitted to cars meet the changing needs of customers will lead the way and the insurance product is inter- change and starting to change their is already affecting average claim twined to make it easier for people to ways of working. Blockbuster should costs, which rose from £2,683 in 2014 live their lives. have come up with a subscription model to £3,326 in the third quarter of 2019. Another startup that, via a pilot, is solution when they saw Netflix coming. The ABI’s motor policy expert also he insurance sector has “Particularly at the consumer end, “So when we were doing the leveraging INSTANDA’s technology to The big car manufacturers should have points out that the car insurance T transformed in recent years there is a level of brand impact, loy- design-thinking around INSTANDA, we be able to approach the market in the been more proactive about electric sector is intensely competitive and from dipping its toes in the alty and psychological alignment that wanted to ensure we could enable any most agile and innovative way is Pikl, vehicles before Tesla came along. Lu/UnsplashFrankie since 1983 there have only been a water when it comes to digitalisa- means it’s hard for any new arrival to kind of insurance to be distributed in a specialist insurance broker which “While we don’t necessarily think few years when UK auto insurance tion, trialling products that weren’t invest the billions of dollars required to any channel. That design-thinking has launched in 2018 with some big-name an upstart is going to disrupt insur- has made an underwriting profit. too expensive or obtrusive, to a clear scale in a meaningful way. Meanwhile, led us to a position where we’re work- backers. Pikl focuses entirely on the ance incumbents in a similar vein, we However, Peate believes the advent recognition that new business models incumbents are doing a good job of ing with some quite amazing compa- sharing economy, whose participants do think the winners will be those that of driverless cars will change the and ways of engaging with customers flexing their models and becoming nies in different geographies across have different characteristics in terms adapt their models and become much way the car insurance market oper- are crucial. While insurtech startups more tuned into their marketplaces, multiple different insurance types.” of insurance products. more digital and flexible in their ways ates. Auto insurance companies cur- have been central to driving this real- which is where we can help.” One of those companies is Canopy, For short-term rentals, such as of doing business. rently use actuarial tables that pro- isation through the traction they’ve INSTANDA’s no-code product a startup insurance firm addressing those booked through Airbnb and “We’re fortunate because we get vide profiles of the owner and driver gained, recently their influence has design platform is built on a pow- issues in the house rental market. HomeAway, homeowners may find that to work with companies that are of the vehicle, based on available been re-evaluated. erful set of insurance-specific cal- Rather than having to put six or eight their standard home insurance policy doing this and it’s why they choose data. The actuarial tables determine Two to three years ago, startups such culations, processing and workflow weeks of rent down upfront as a is invalidated and any claims rejected, INSTANDA. The losers will be the ones how much to charge, for example, as Trov and Lemonade were being her- capabilities that free companies deposit, which is often difficult for even if they only let a room or the whole that haven’t moved fast enough. a 35-year-old male in a particular alded as representing the emergence from high-cost legacy systems. people to fund, Canopy provides a property for a couple of nights. Pikl has Companies that haven’t moved postal code and with a certain credit of new business models and the defi- Using its software, organisations can unique insurance proposition that developed a suite of products that will quickly are still giving decent returns score. However, as the car does nition of how insurance should now amend rates, questions, documents acts in lieu of the deposit. House rent- fill this ‘insurance gap’ and run along- to shareholders and perhaps it’s going more and more of the driving, these be thought about. Since then, how- and customer journeys in minutes, ers can pay for an insurance product side homeowners’ standard policies. to take 10 to 15 years before you start actuarial tables and profiles will no ever, Trov has pivoted and is provid- and new products can be launched that avoids them having to pay for an On the other end of the scale, insur- to see those organisations suffer- longer make sense. ing a service in collaboration with the in days. Return on investment is upfront deposit at all. ance giant Aviva has been working with ing. However, the companies that we Rather, auto insurers should “look large organisations in the industry. delivered in weeks via dramatically To meet the needs of millennials, INSTANDA to introduce innovative work with truly believe, unless they do at the kind of car, what features it Lemonade, meanwhile, a firm with a reduced product manufacturing, which make up a large proportion of new products in life and health cover. something now, they will lose out in has and how often those features huge valuation and significant hype underwriting and distribution costs, house renters, Canopy has built an The company carried out significant the next three to five years. are being engaged”, says Peate, add- behind it, still has to prove it will be and improved customer experience. research1 which revealed three in ten ing that this data shift changes auto able to make a significant difference “When we were considering the small and medium-sized enterprises insurance fundamentally, so insur- 1. Survey of 102 businesses with 1 to 9 employees, to the market at scale. technology needed to address some (SMEs) struggle to offer competitive carried out by Censuswide on behalf of Aviva, ers no longer make assumptions “Our hypothesis is there will defi- of the pain points in the industry, we benefits for their employees. With March 2019 based on a profile. nitely be more insurtech upstarts, abstracted ourselves from the vari- SMEs citing product cost and lack of He concludes: “As cars increasingly but in terms of new entrants making ety of insurance products in differ- staff and resources to manage bene- For more information please visit share data, we can understand when a significant difference to the insur- ent geographies and with different fits as the two biggest barriers, Aviva instanda.com/request-a-demo people drive, where they drive, how ance market at scale, the jury’s still distribution models, and thought The winners will be those that has seen a gap to offer a flexible, highly they drive, including what safety out,” says Tim Hardcastle, founder and what is insurance actually about?” tailored, yet simplified, protection features they are using, how the car chief executive of INSTANDA, whose says Hardcastle. “Simplistically, it’s adapt their models and become insurance for small businesses. drives, and we can determine what cloud software enables insurance about data and ingestion, some rules much more digital and flexible in “It’s fascinating for us to have a tech- insurance rates should be in near firms to easily create, manage and dis- and then issuing a contract. It’s quite nology platform that can accommo- real time. We think this is the future tribute their products. simple in that respect. their ways of doing business date very different business models of driverless car insurance.” 14 FUTURE OF INSURANCE RACONTEUR.NET 15

PRICING

Everybody is in Data explosion Yiran Ding/Unsplash the dark and the only option is to just requires more trust the system

transparency “It means everybody is in the dark and the only option is to just trust the system,” says Sadowski. “This is easy for insurers if the system from insurers leads to outcomes that benefit their interests, but it’s not so easy for customers who are left wondering why. Or, more likely, are totally unaware Lack of transparency in risk that a machine played a potentially assessment and pricing is becoming large part in deciding their premium or claim.” an even greater problem in the age Despite the concern over proxy discrimination and the lack of trans- of personalised insurance parency about how our data is used in policies, the future of personalised insurance still looks bright. The use of artificial intelligence (AI) and IoT data has led to more opportunity than ever for life insur- Rossalyn Warren ers to not only save costs and build closer relationships with customers, but to also improve and refine nsurers are increasingly interest particularly high among the accuracy of their processes. For I relying on consumers to 25 to 44 year olds. In 2017, only 57 example, studies have found a per- give up their data, with per cent were willing to share data sonalised insurance model encour- connected devices continuously with their insurers in return for ages customer retention, loyalty and sending information on driving new benefits. increased purchases. habits and exercise routines in real While consumers may be happy to A recent study by Mindtree found time in exchange for more personal- share their personal data with insur- 77 per cent of banking and insur- ised products and services. But does ance companies, how the compa- ance customers across America, more data on individuals necessar- nies use such data, and whether the Europe and Asia say customised ily mean a fairer and more accurate data is used fairly and in a transpar- promotions encouraged them to cost for consumers? ent manner, is another matter. buy products and services they have Big data has transformed many Thanks to the digital transfor- never purchased before. In addi- industries and the insurance world mation in the insurance industry, tion, 68 per cent of companies say is no different. From fitness trackers personalised insurance has been more targeted, personalised promo- to smart cars, advances in technol- useful in tackling cognitive biases. tions are the key driver of improved ogy and data now allow insurers to However, access to new sources of online sales over the past 12 months. collect, store and analyse informa- data about people, and new ways While there are benefits for insurers tion on a far larger scale. to analyse that data, have also pro- and customers to embrace personal- And it’s attracting interest from vided insurers with new methods ised insurance, proxy discrimination an increasing number of consum- for proxy discrimination, which is will represent an increasingly diffi- ers too. Research last year from increasingly proving more difficult cult challenge to the insurance indus- Accenture found 80 per cent of con- to identify and combat. try, especially as AI and big data will sumers are willing to share their Gareth Shaw, a money expert at the characteristics, such as gender, reli- companies are falling behind in In its review, the FCA concluded continue to play a greater role. But internet of things (IoT) data for consumer body Which?, says while gion, race and disability, there are successfully combating the issue, firms that use external and IoT data there are few clear answers on how personalised services, lower prices it’s against the law for insurers to set grey areas where these principles are largely because there isn’t enough within their pricing models do not technology could address this. and faster claims processing, with their prices according to protected potentially being skirted, intention- care being paid to the problem. always undertake due diligence to A 2019 study by the University of ally or not. In 2018, the Financial Conduct ensure the data did not include factors Iowa on proxy discrimination in “Insurers collect vast amounts of Authority (FCA) conducted a review with the potential to discriminate. the age of AI and big data, proposes information from you, but certain into pricing practices in household Part of the problem behind the insurance companies could develop PRICING BIAS CAN HYPOTHETICALLY MAKE PREMIUMS details are off limits,” he explains. insurance. While the review didn’t bias in insurance is there’s little efforts to encourage fairness in pre- HIGHER FOR SAFER DRIVERS “It’s against the law for them to set find any evidence of direct dis- transparency about insurance risk dictive models, such as developing their prices according to protected crimination based on ethnicity or assessment and pricing, and the use algorithms that explicitly seek to Average car insurance annual premiums in the UK, by age characteristics, or ask for or use other protected characteristics, it of new technology only compounds pinpoint proxy discrimination. information about protected char- did find there were potential prox- this opacity. However, the report accepts £ £ £ £ £ £ £ 851 719 639 575 468 491 752 acteristics, but they can sometimes ies for protected characteristics in Jathan Sadowski, a technology there are limitations and warns AI infer this from answers to other data being used by insurers within researcher who writes on how data is armed with big data is still inher- £800 questions. These are sometimes pricing models. In some cases, it used in industries, says when insur- ently structured to engage in proxy referred to as proxy factors.” found some insurance firms were ance calculations were made by peo- discrimination whenever they’re For example, in 2016, Which? using datasets that contained fac- ple, there were at least intuitively deprived of information, and simply £600 found examples of motor insurers tors which could implicitly relate to plausible reasons behind what fac- denying access to such information charging higher prices to custom- race or ethnicity. tored into an insurer’s assessment does little to solve the problem. ers who said they were born outside To understand this, the FCA asked and pricing. As insurance companies use the UK, even though they’d learnt how insurers were sure the third- But now, with machine-learning increasingly granular and detailed £400 to drive in the UK. Strictly speak- party data they used in pricing did systems doing analysis and mak- data about each individual per- ing, no questions about their race not discriminate against certain ing decisions, he says there’s a good son’s behaviour to refine their risk or ethnicity had been asked, but the customers. However, many firms chance that nobody – customers, assessments, they will need to £200 insurers admitted to having used could not provide this assurance insurers, regulators or programmers address the ethical challenges this information about the customers’ without first contacting the third- – can actually explain how an auto- technology brings to their industry. national origins – part of how race is party provider, which means insur- mated decision was reached. One thing is clear: to tackle proxy defined under the Equality Act 2010 ers themselves were using the data As a result, consumers are left in discrimination, for the sake of the Follow us on: – in their calculations. with little understanding of how it the dark over the full extent of what consumer, insurers must put trans- Age 20 25 35 45 55 65 75 As proxy discrimination is more could shape insurance policies to personal data is being factored into parency and fairness at the core of ValuePenguin 2019 difficult to identify and combat, the detriment of the consumer. the pricing of their insurance. every insurance decision. RACONTEUR.NET 15

Everybody is in Yiran Ding/Unsplash the dark and the only option is to just trust the system

“It means everybody is in the dark and the only option is to just trust the system,” says Sadowski. “This is easy for insurers if the system leads to outcomes that benefit their interests, but it’s not so easy for customers who are left wondering why. Or, more likely, are totally unaware that a machine played a potentially large part in deciding their premium or claim.” Despite the concern over proxy discrimination and the lack of transparency about how our data is used in policies, the future of personalised insurance still looks bright. The use of artificial intelligence (AI) and IoT data has led to more opportunity than ever for life insurers to not only save costs and build closer relationships with customers, but to also improve and refine the accuracy of their processes. For example, studies have found a personalised insurance model encourages customer retention, loyalty and increased purchases. A recent study by Mindtree found 77 per cent of banking and insurance customers across America, Europe and Asia say customised promotions encouraged them to buy products and services they have never purchased before. In addition, 68 per cent of companies say more targeted, personalised promotions are the key driver of improved online sales over the past 12 months. While there are benefits for insurers and customers to embrace personalised insurance, proxy discrimination will represent an increasingly difficult challenge to the insurance industry, especially as AI and big data will companies are falling behind in In its review, the FCA concluded continue to play a greater role. But successfully combating the issue, firms that use external and IoT data there are few clear answers on how largely because there isn’t enough within their pricing models do not technology could address this. care being paid to the problem. always undertake due diligence to A 2019 study by the University of In 2018, the Financial Conduct ensure the data did not include factors Iowa on proxy discrimination in Authority (FCA) conducted a review with the potential to discriminate. the age of AI and big data, proposes into pricing practices in household Part of the problem behind the insurance companies could develop insurance. While the review didn’t bias in insurance is there’s little efforts to encourage fairness in pre- find any evidence of direct dis- transparency about insurance risk dictive models, such as developing crimination based on ethnicity or assessment and pricing, and the use algorithms that explicitly seek to other protected characteristics, it of new technology only compounds pinpoint proxy discrimination. did find there were potential prox- this opacity. However, the report accepts ies for protected characteristics in Jathan Sadowski, a technology there are limitations and warns AI data being used by insurers within researcher who writes on how data is armed with big data is still inher- pricing models. In some cases, it used in industries, says when insur- ently structured to engage in proxy found some insurance firms were ance calculations were made by peo- discrimination whenever they’re using datasets that contained fac- ple, there were at least intuitively deprived of information, and simply tors which could implicitly relate to plausible reasons behind what fac- denying access to such information race or ethnicity. tored into an insurer’s assessment does little to solve the problem. To understand this, the FCA asked and pricing. As insurance companies use how insurers were sure the third- But now, with machine-learning increasingly granular and detailed party data they used in pricing did systems doing analysis and mak- data about each individual per- not discriminate against certain ing decisions, he says there’s a good son’s behaviour to refine their risk customers. However, many firms chance that nobody – customers, assessments, they will need to could not provide this assurance insurers, regulators or programmers address the ethical challenges this without first contacting the third- – can actually explain how an auto- technology brings to their industry. party provider, which means insur- mated decision was reached. One thing is clear: to tackle proxy ers themselves were using the data As a result, consumers are left in discrimination, for the sake of the with little understanding of how it the dark over the full extent of what consumer, insurers must put trans- could shape insurance policies to personal data is being factored into parency and fairness at the core of the detriment of the consumer. the pricing of their insurance. every insurance decision. 16 FUTURE OF INSURANCE RACONTEUR.NET 17 Commercial feature

TRAVEL INSURANCE Protected in 171 seconds: Uncertainty Images Getty via Ciommo/NurPhoto Di Alessandro Data-led insurance for new economies prevails as The way we live has changed. Consumers demand speed, flexibility and convenience in all aspects of their lives, from urban mobility to parcel and pizza delivery. So is the commercial insurance sector coronavirus keeping pace, asks David Daiches, co-founder and chief operating officer of INSHUR rattles travel

The coronavirus outbreak has raised t the new decade’s dawn, While technology has powered the A it is constructive for the gig, sharing and new mobility econo- questions in the insurance industry insurance industry to mies, there is a critical need for the reflect upon the societal changes insurance industry to adapt, mod- for both travellers and insurers alike that have been wrought since the ernise and close the gap on cus- turn of the millennium and acceler- tomer expectations. ated through technological advancements. Is insurance keeping pace Protection for people, Marianne Curphey with changing demand? parcels and pizza Consider that the smartphone era, Traditional insurance is too rigid and triggered by Apple launching the slow. For example, think of picking ith business and leisure outbreaks occur. They also need to iPhone, began only 13 years ago. And up a city car for an hour, an Uber W trips cancelled, plans use predictive data to process claims that Uber and Airbnb, leaders in the or the items delivered by a courier amended and access to more efficiently during and after sharing economy, are both under a or pizza company. All these require some parts of China restricted, indi- such outbreaks. dozen years old. New businesses and real-time protection of varying viduals and businesses have had to “Recent events are likely to have economies are emerging all the time degrees and for the end-user expe- claim on their travel insurance as a driven companies to pay more instantaneously across different to support how we live as a society. rience to be seamless. result of the coronavirus. attention to budgets and risk mod- technology platforms. The reality is technology has At INSHUR, which launched in New While coronavirus (COVID-19) rav- els,” Dominguez explains. “Policies “In addition, by moving its trans- changed the way we live. We don’t York in 2017 and the UK in late-2018, ages Hubei province, international designed to cover widespread epi- actions onto a shared ledger, a visit the high street in the same num- we have built a technology platform airlines have cancelled flights and demic insurance are invaluable, but health insurer can eliminate fraudu- bers, in urban areas car ownership is on which we sell insurance products some governments have restricted are only worthwhile if insurers are lent and duplicate claims by logging changing and how we move around is to respond to these emerging econ- entry from anyone who has recently there for their customers right the each transaction in a decentralised now full of choice. We expect food, omies. We have proven our platform travelled to China. way through the process.” repository. Instantly, the insur- parcels and the like to be delivered within the private hire and ride-share Travel insurance covers medi- Navigating outbreaks of dis- ance company is able to verify the quickly to our door, at the swipe of space, and are now extending our cal treatment, repatriation, cancel- ease can be complex for insurers, Getty Images via Triballeau/AFP Charly authenticity of a customer, policy or a finger or click of a button. These reach into new vertical industries and lation of trip and treatment while as new risks can emerge from day claim. This is a simple premise, but services and new economies may be further territories. abroad, but the level of cover varies to day. New updates on disease a huge step forward for fast-tracking modern, but they still require protec- INSHUR offers something very dif- greatly depending on the policy that control and prevention are being claims processing.” tion from one of the oldest industries ferent from traditional insurance has been purchased. If many hun- issued by governments, and cen- Peter Smith, head of strategic part- in the world: insurance. experience. Firstly, our platform is progress. From the outset, we have are meeting a need. The “talkability” dreds of thousands of policyhold- tres for disease control are doing nerships for travel, in Europe, Middle accessible via a mobile app, so unlike engaged with drivers on a one-to- within our customer base is almost ers have to claim, can the insurance their best to provide guidance East and Africa, at Cover Genius, a traditional broker, we are accessi- one basis every single day, to under- unheard of in the insurance space, industry cope with the administra- for healthcare workers and those which provides insurance for the ble 24 hours a day, every day of the There is a critical need for the stand their painpoints better and after all no one really loves insurance, tion and the costs? involved in public health. world’s largest ecommerce compa- year, thereby putting the end-user how we can solve them. We want to and will help us make inroads into Insurance firms are going to be the “This is why it is crucial for insur- nies, including travel brands such in control. And rather than spending insurance industry to adapt, get drivers on the road faster, reduce other markets in the coming months. first in line to feel the pain of any ers to have a system in place that as Booking.com, says technology is hours or even days on the phone liais- modernise, and close the gap on paperwork and provide them with an Using our platform approach, con- widescale illness or travel disrup- quickly delivers proactive alerts to driving change and efficiencies right 171 ing with a broker, unravelling reams of exceptional customer experience. necting with partner APIs and being data tion, says Michael Weaver, manag- customers in real time, as soon as circumstances, when there is a Passengers leave normal working day, but in the event across the insurance industry. documentation, our customers scan customer expectations It is thanks to customer feedback led means we can enter new markets ing director and head of valuation new updates occur,” she says. sudden and unexpected event, it the Diamond of an epidemic such as coronavirus, “Behind the scenes, a clever use of seconds their driving licence and private hire that in September we launched our faster. It is clear there are huge oppor- Princess cruise ship advisory at Duff & Phelps. Dominguez believes insurers need may not be able to cope. following a two- the impact can be catastrophic.” technology can breed greater effi- the fastest transaction on the licence, and enter their vehicle reg- new Flex products. The first of its kind tunities that have been presented by “Beyond the impact that corona- to share advice on how to stay safe “The health insurance industry is week quarantine As soon as an outbreak affects a ciencies in areas that traditional INSHUR platform from quote istration number to receive a quote. in the UK market, Flex allows private new economies and a new kind of insur- virus has had on many lives, insur- if the health risk level increases or plagued with inefficiencies because in Japan policyholder’s travel plans, insur- insurers heavily resource, such as to purchase hire drivers to pay for their insurance protection is required. ance firms are likely to suffer the if flights, for example, are cancelled the processes underpinning it have ers should use predictive and his- call centres, where hundreds of peo- Age of the API and alternative provide new and dynamic underwriting ance only when they are on the road. At INSHUR we have built a technol- most tangible business losses from to that country. For customers, remained largely unchanged for torical data to determine the like- ple manning the phones is becom- data-led insurance factors that can complement pricing Additionally, at the start of this year, ogy platform that works perfectly for the outbreak,” he says. “Following information about how to claim for hundreds of years,” she says. “This lihood of future disruption, review ing a thing of the past,” he says. By using APIs (application program- decisions. This data transfer is in real INSHUR introduced a concierge-style the ride-share and private hire mar- countless cancelled flights, holi- refunds must be communicated as reliance on antiquated systems the latest information from the American Express Global Business ming interfaces) to integrate with our time, much faster than waiting for a insurance policy for Uber Pro drivers, kets, but it can easily be applied in days and events, travel and leisure soon as possible. causes major challenges on any authorities and any other factors Travel (GBT) manages more than From partners, we can securely pull through customer to tell you they have moved offering discounts of up to 20 per other verticals. Our alternative data businesses will quickly begin to feel “To be prepared for outbreaks like that could affect the outcome of the $35 billion of the world’s business data during the quoting process, house, changed vehicle and so on. cent off their premiums. sources power better underwriting the effects of disrupted business coronavirus, insurers shouldn’t wait claim, says Dominguez. travel, supporting close to ten mil- which means the customer needs only Not only do these new data sources As the traditional insurance players decisions and the speed of cover we continuity and will not hesitate to until they are asked about these, but While Rugg argues that the speed lion travellers each year. Martin answer a handful of questions. significantly improve the customer grapple with modernising their prod- offer is what these new economies make a claim.” should proactively send the most with which an insurer can process a Ferguson, vice president of public 10 to60 That makes our service much experience, they also ensure the ucts, at INSHUR we have worked hard ultimately demand. Insurance expert Andi Dominguez up-to-date information to custom- claim can in turn improve the abil- affairs at GBT, says using technology team members since quicker and more convenient for policy is being priced at a level which to gain the trust of customers, being from Quadient believes that the ers over their preferred channel, be ity of healthcare providers to treat can help provide a better service in December 2018 drivers, whose top priority is to be on safeguards the long-term viability of rated “excellent” on Trustpilot and travel insurance industry has many that email, SMS or instant messag- patients and prevent the spread of a difficult situations. the road so they can earn money, and the insurer. This ultimately protects earning an average of 4.8 stars from For more information please visit steps to take before it’s truly pre- ing,” she says. Health insurance is plagued potentially deadly supervirus. “The richer the data, the more we help them do just that. Indeed, the customer and reduces any poten- more than 3,000 app store reviews. inshur.com/uk pared for outbreaks like coronavi- An underlying problem for the with inefficiencies because the “For instance, a hospital can effective the support,” he says. one driver was able to get a quote and tial friction when a claim is filed. Moreover, around 50 per cent of our rus. She says insurance companies insurance industry is its historic share certain information about “Services can geo-locate travellers purchase cover in only 171 seconds. growth is attributable to word-of- need to provide customers with a inefficiency, says Ryan Rugg, processes underpinning it have its patients with the insurance and communicate with them via Not only do these new data inte- Driven by customer invention mouth recommendations. better understanding of policy cov- global head of industry at block- remained largely unchanged for company via a blockchain plat- mobile app, and can help pinpoint $10m grations help to make roads safer by We realise that customers are the That excellent reputation, and that erage, and what is not included, chain firm R3. While the system form,” she says. Once a consensus them via their very recent credit immediately notifying our partners beating heart of what we do; their we are part of their conversations, longer term and even before may tick along fine in normal hundreds of years is reached, settlements can happen card transactions.” total funding raised if a driver’s policy lapses, they also concerns come first and help drive our is a powerful indicator our products INSHUR 16 FUTURE OF INSURANCE RACONTEUR.NET 17 Commercial feature

The coronavirus outbreak has raised t the new decade’s dawn, While technology has powered the A it is constructive for the gig, sharing and new mobility econo- questions in the insurance industry insurance industry to mies, there is a critical need for the reflect upon the societal changes insurance industry to adapt, mod- for both travellers and insurers alike that have been wrought since the ernise and close the gap on cus- turn of the millennium and acceler- tomer expectations. ated through technological advancements. Is insurance keeping pace Protection for people, Marianne Curphey with changing demand? parcels and pizza Consider that the smartphone era, Traditional insurance is too rigid and triggered by Apple launching the slow. For example, think of picking ith business and leisure outbreaks occur. They also need to iPhone, began only 13 years ago. And up a city car for an hour, an Uber W trips cancelled, plans use predictive data to process claims that Uber and Airbnb, leaders in the or the items delivered by a courier amended and access to more efficiently during and after sharing economy, are both under a or pizza company. All these require some parts of China restricted, indi- such outbreaks. dozen years old. New businesses and real-time protection of varying viduals and businesses have had to “Recent events are likely to have economies are emerging all the time degrees and for the end-user expe- claim on their travel insurance as a driven companies to pay more instantaneously across different to support how we live as a society. rience to be seamless. result of the coronavirus. attention to budgets and risk mod- technology platforms. The reality is technology has At INSHUR, which launched in New While coronavirus (COVID-19) rav- els,” Dominguez explains. “Policies “In addition, by moving its trans- changed the way we live. We don’t York in 2017 and the UK in late-2018, ages Hubei province, international designed to cover widespread epi- actions onto a shared ledger, a visit the high street in the same num- we have built a technology platform airlines have cancelled flights and demic insurance are invaluable, but health insurer can eliminate fraudu- bers, in urban areas car ownership is on which we sell insurance products some governments have restricted are only worthwhile if insurers are lent and duplicate claims by logging changing and how we move around is to respond to these emerging econ- entry from anyone who has recently there for their customers right the each transaction in a decentralised now full of choice. We expect food, omies. We have proven our platform travelled to China. way through the process.” repository. Instantly, the insur- parcels and the like to be delivered within the private hire and ride-share Travel insurance covers medi- Navigating outbreaks of dis- ance company is able to verify the quickly to our door, at the swipe of space, and are now extending our cal treatment, repatriation, cancel- ease can be complex for insurers, Getty Images via Triballeau/AFP Charly authenticity of a customer, policy or a finger or click of a button. These reach into new vertical industries and lation of trip and treatment while as new risks can emerge from day claim. This is a simple premise, but services and new economies may be further territories. abroad, but the level of cover varies to day. New updates on disease a huge step forward for fast-tracking modern, but they still require protec- INSHUR offers something very dif- greatly depending on the policy that control and prevention are being claims processing.” tion from one of the oldest industries ferent from traditional insurance has been purchased. If many hun- issued by governments, and cen- Peter Smith, head of strategic part- in the world: insurance. experience. Firstly, our platform is progress. From the outset, we have are meeting a need. The “talkability” dreds of thousands of policyhold- tres for disease control are doing nerships for travel, in Europe, Middle accessible via a mobile app, so unlike engaged with drivers on a one-to- within our customer base is almost ers have to claim, can the insurance their best to provide guidance East and Africa, at Cover Genius, a traditional broker, we are accessi- one basis every single day, to under- unheard of in the insurance space, industry cope with the administra- for healthcare workers and those which provides insurance for the ble 24 hours a day, every day of the There is a critical need for the stand their painpoints better and after all no one really loves insurance, tion and the costs? involved in public health. world’s largest ecommerce compa- year, thereby putting the end-user how we can solve them. We want to and will help us make inroads into Insurance firms are going to be the “This is why it is crucial for insur- nies, including travel brands such in control. And rather than spending insurance industry to adapt, get drivers on the road faster, reduce other markets in the coming months. first in line to feel the pain of any ers to have a system in place that as Booking.com, says technology is hours or even days on the phone liais- modernise, and close the gap on paperwork and provide them with an Using our platform approach, con- widescale illness or travel disrup- quickly delivers proactive alerts to driving change and efficiencies right 171 ing with a broker, unravelling reams of exceptional customer experience. necting with partner APIs and being data tion, says Michael Weaver, manag- customers in real time, as soon as circumstances, when there is a Passengers leave normal working day, but in the event across the insurance industry. documentation, our customers scan customer expectations It is thanks to customer feedback led means we can enter new markets ing director and head of valuation new updates occur,” she says. sudden and unexpected event, it the Diamond of an epidemic such as coronavirus, “Behind the scenes, a clever use of seconds their driving licence and private hire that in September we launched our faster. It is clear there are huge oppor- Princess cruise ship advisory at Duff & Phelps. Dominguez believes insurers need may not be able to cope. following a two- the impact can be catastrophic.” technology can breed greater effi- the fastest transaction on the licence, and enter their vehicle reg- new Flex products. The first of its kind tunities that have been presented by “Beyond the impact that corona- to share advice on how to stay safe “The health insurance industry is week quarantine As soon as an outbreak affects a ciencies in areas that traditional INSHUR platform from quote istration number to receive a quote. in the UK market, Flex allows private new economies and a new kind of insur- virus has had on many lives, insur- if the health risk level increases or plagued with inefficiencies because in Japan policyholder’s travel plans, insur- insurers heavily resource, such as to purchase hire drivers to pay for their insurance protection is required. ance firms are likely to suffer the if flights, for example, are cancelled the processes underpinning it have ers should use predictive and his- call centres, where hundreds of peo- Age of the API and alternative provide new and dynamic underwriting ance only when they are on the road. At INSHUR we have built a technol- most tangible business losses from to that country. For customers, remained largely unchanged for torical data to determine the like- ple manning the phones is becom- data-led insurance factors that can complement pricing Additionally, at the start of this year, ogy platform that works perfectly for the outbreak,” he says. “Following information about how to claim for hundreds of years,” she says. “This lihood of future disruption, review ing a thing of the past,” he says. By using APIs (application program- decisions. This data transfer is in real INSHUR introduced a concierge-style the ride-share and private hire mar- countless cancelled flights, holi- refunds must be communicated as reliance on antiquated systems the latest information from the American Express Global Business ming interfaces) to integrate with our time, much faster than waiting for a insurance policy for Uber Pro drivers, kets, but it can easily be applied in days and events, travel and leisure soon as possible. causes major challenges on any authorities and any other factors Travel (GBT) manages more than From partners, we can securely pull through customer to tell you they have moved offering discounts of up to 20 per other verticals. Our alternative data businesses will quickly begin to feel “To be prepared for outbreaks like that could affect the outcome of the $35 billion of the world’s business data during the quoting process, house, changed vehicle and so on. cent off their premiums. sources power better underwriting the effects of disrupted business coronavirus, insurers shouldn’t wait claim, says Dominguez. travel, supporting close to ten mil- which means the customer needs only Not only do these new data sources As the traditional insurance players decisions and the speed of cover we continuity and will not hesitate to until they are asked about these, but While Rugg argues that the speed lion travellers each year. Martin answer a handful of questions. significantly improve the customer grapple with modernising their prod- offer is what these new economies make a claim.” should proactively send the most with which an insurer can process a Ferguson, vice president of public 10 to60 That makes our service much experience, they also ensure the ucts, at INSHUR we have worked hard ultimately demand. Insurance expert Andi Dominguez up-to-date information to custom- claim can in turn improve the abil- affairs at GBT, says using technology team members since quicker and more convenient for policy is being priced at a level which to gain the trust of customers, being from Quadient believes that the ers over their preferred channel, be ity of healthcare providers to treat can help provide a better service in December 2018 drivers, whose top priority is to be on safeguards the long-term viability of rated “excellent” on Trustpilot and travel insurance industry has many that email, SMS or instant messag- patients and prevent the spread of a difficult situations. the road so they can earn money, and the insurer. This ultimately protects earning an average of 4.8 stars from For more information please visit steps to take before it’s truly pre- ing,” she says. Health insurance is plagued potentially deadly supervirus. “The richer the data, the more we help them do just that. Indeed, the customer and reduces any poten- more than 3,000 app store reviews. inshur.com/uk pared for outbreaks like coronavi- An underlying problem for the with inefficiencies because the “For instance, a hospital can effective the support,” he says. one driver was able to get a quote and tial friction when a claim is filed. Moreover, around 50 per cent of our rus. She says insurance companies insurance industry is its historic share certain information about “Services can geo-locate travellers purchase cover in only 171 seconds. growth is attributable to word-of- need to provide customers with a inefficiency, says Ryan Rugg, processes underpinning it have its patients with the insurance and communicate with them via Not only do these new data inte- Driven by customer invention mouth recommendations. better understanding of policy cov- global head of industry at block- remained largely unchanged for company via a blockchain plat- mobile app, and can help pinpoint $10m grations help to make roads safer by We realise that customers are the That excellent reputation, and that erage, and what is not included, chain firm R3. While the system form,” she says. Once a consensus them via their very recent credit immediately notifying our partners beating heart of what we do; their we are part of their conversations, longer term and even before may tick along fine in normal hundreds of years is reached, settlements can happen card transactions.” total funding raised if a driver’s policy lapses, they also concerns come first and help drive our is a powerful indicator our products INSHUR 18 FUTURE OF INSURANCE RACONTEUR.NET 19 Commercial feature

severity of natural catastrophes, OPINION and exposure to carbon-transition risk through their investment portfolios and the possibil- The increase in

Dan Gold/Unsplash Dan ity of stranded assets,” according to Brandan Holmes, senior credit the frequency and officer at Moody’s. intensity of extreme Insurance needs In the foreword to an extensive ‘Given the importance analysis on climate-change risk, pub- weather events could lished by the Bank of International trigger non-linear Settlements in January, François of insurance to sustained to speed up Villeroy de Galhau, governor of the and irreversible Bank of France, issues a similarly financial losses austere warning. economic growth, it A turbulent investment environment encourages “The increase in the frequency and intensity of extreme weather events insurance operators out of cruise control could trigger non-linear and irre- should be a service versible financial losses,” he says. “In turn, the immediate and sys- that is recognised and tem-wide transition required to fight raditionally, the insurance climate change could have far-reach- T sector has consisted of large ing effects potentially affecting every appreciated’ organisations that could single agent in the economy and take time to analyse the various com- every single asset price.” 67% plexities sitting within their books and Though progress towards adapt- spend significant resources on building ing to a new ESG-centric world has bespoke modelling tools to understand in many cases been sluggish, there of insurers are focusing more on ESG ver the last 20 years, insur- Alternatively, insurers could step these complex dynamics. are some insurance companies that investments than a year ago O ers have focused on con- forward and play a bigger role in However, the past two years has are paving the way. venience, especially for managing risks. For example, by witnessed a digital injection, com- In November 2019, Paris-based BlackRock 2019 those buying and renewing cover. creating a service that is designed to plete with regulatory sandboxes, and a multinational insurance firm AXA For most of us, this means our inter- coach us towards better behaviours. common expectation of innovation to committed to aligning its invest- action with the insurance profession In this scenario, traditional finan- change the industry. ments with the United Nations- has shrunk to a few minutes spent cial products will simply be a com- The new norm means that to provide backed 2015 Paris Agreement and sustainability. In a separate letter to online two or three times a year. ponent in a larger range of services digital guidance to policyholders, organ- pledged to commit to a 1.5C warm- BlackRock’s clients, he vowed that However, the impact that insur- that include information and tools isations have to follow suit themselves. ing potential by 2050. The warming by the middle of this year the firm ance has on our lives is far greater for people to manage their own risks Ortec Finance, a specialist in ALM potential is defined as the impact would divest stakes in companies in than this. Not only do insurers pay more effectively. (asset-liability management), is look- AXA’s investments may have on cli- BlackRock’s actively managed port- out billions of pounds in claims In the corporate space, insurers ing to leverage its global experience mate, expressed in temperature. folios which derive more than 25 per every year, insurance underpins and brokers can choose to be prod- and unique model-based approach to INVESTMENT AXA in 2015 became the first cent of their revenues from thermal many of the processes that keep uct suppliers, distributing tradi- investment decision-making to not just of the major investors to divest coal production. society ticking over. tional insurance products through facilitate insurance clients’ accelera- from the coal industry and it Martha McPherson, head of green For example, when we are sick at increasingly demanding procure- tion towards digital, but to accelerate has since committed to a com- economy and sustainable growth work and our employer pays us an ment exercises or they can become in the right direction. plete coal exit by 2030 in Europe at University College London’s income that goes beyond the statu- fully fledged risk managers, helping “Traditionally, insurance clients would Insurers feel the heat and Organisation for Economic Institute for Innovation and Public tory minimum, there will often be clients to understand and mitigate have worked with software applications Co-operation and Development Purpose, says insurance companies a group insurance product funding their risks themselves. that took days to run and in the past countries, and by 2040 for the rest have an obligation to adjust, even these benefits and, indeed, effective We already see this approach in that would have been fine,” explains problem-solve and innovate, and we of the world. if some financial services firms are support for rehabilitation may be areas such as cyber-insurance, the company’s managing director for continuously improve our own ser- over investments A significant development forcing lagging in their commitments. arranged by the insurer as well. where traditional insurance prod- Insurance, Marco Hoogendijk. 96% vice to ensure we can keep improving insurance investment management “Nobody needs reminding that Similarly, if a chain of distributors ucts rarely cover every risk. “However, given the uncertainty and theirs,” says Hoogendijk. to become greener is that the world’s the climate crisis is urgent, but goes bust, credit insurance will help Instead, brokers are developing opportunities digital insurance brings, A new, improved modular approach, Insurers are starting to feel the pressure over climate change, largest asset managers’ efforts to the responses of some players in suppliers avoid going down with it. services that help organisations together with a continued challeng- client retention rate which where insurance companies’ different decarbonise are gathering pace, set- the UK’s financial sector have As new risks appear, such as cyber- plan for cyberattacks, while insur- ing investment environment, man- speaks to our ability to problem- departments can subscribe to techno- not just as companies pay up when catastrophes hit, but also ting a standard. been glacial. With the UK hosting crime or new forms of terrorism, ers are preparing benefits in kind, agement teams are now demanding solve and innovate; and we logical advancements that are specific In January, Larry Fink, chief COP26 in November, now is the insurance helps to mitigate their such as legal and reputational sup- their organisations have the ability to continuously improve our own to their domain, is testament to this as the spotlight turns to insurance investment management executive of bellwether BlackRock, time to make a genuine, cross-sec- impact on all those affected. port that can minimise the impact respond more quickly to the complex service to ensure we can keep philosophy. It also lays the foundations which has approximately $7 tril- tor commitment to tackle climate In a recent report, the World Bank of an attack as soon as it takes place. questions they face.” improving theirs to help combat even bigger industry lion of assets under management, change,” she says. found that over a period of four dec- Whether insurers step to the fore- For this to be achieved, they require challenges yet to come. wrote to business leaders stating As for insurance investment man- ades, sustained economic decline front of risk management or retreat software solutions that have the abil- Chiefly, as Hoogendijk says, these that they must stamp out unsus- agement, McPherson says compa- was concentrated almost exclusively to the background matters to us all. ity to engage on a real-time basis more to navigate these challenging envi- bigger challenges include understand- Josie Cox signalling failure to decarbonise tainable business practices or risk nies are already aware of their role on countries that had a below-av- Services that are hidden tend to be easily, while simultaneously being able ronments successfully.” ing the impact climate change will have could cause severe damage and, in serious economic repercussions, in to price and manage risks, and offer erage level of insurance premiums. undervalued, but services which to analyse future potential scenarios. Understanding and conveying the on insurance in the future. some cases, mean insurers fail to addition to irreparable damage to security to both their policyholders A thriving insurance profession all make a connection with our day-to- Working primarily with large life implications of multiple economic “We will see interesting develop- or the insurance sector’s a far more systemic and complex cri- meet financial obligations. the planet. and society more broadly. She con- but guarantees increasing prosper- day lives are cherished and thrive. insurance companies and pension landscapes is where Ortec Finance ments on both the asset and liabili- F major players, the biggest sis. The value of many of the assets "Climate change in particular Fink warned his company would cludes: “It is inevitable that insur- ity for individuals, but an underde- Given the importance of insurance plans, Ortec Finance boasts a sophis- really adds value, preparing insurance ties side as a result of climate-change immediate challenge pre- insurers hold could easily be imper- gives rise to greater uncertainty “be increasingly disposed” to cast ers will need, and want, to play an veloped insurance sector turns sus- to sustained economic growth, it’s ticated toolset that helps to evalu- companies on both the asset and lia- implications,” he concludes. “This, in sented by climate change has been illed by an accelerating transition for insurers, both with respect to critical proxy votes if organisations increasing role in championing a tained prosperity into a lottery. important it should be a service that ate both current and possible future bility sides for the next, possible major tandem with developments being made an increasing frequency of extreme towards a low-carbon economy that expectations for frequency and were not committing to greater low-carbon economy.” New technology means the insur- is recognised and appreciated. It is market conditions via its Economic move in the market. around big data and machine-learn- weather events, ratcheting up shuns fossil fuels and assets contrib- ance profession is now at a crossroads. in all our best interests if the insur- Scenario Generator, part of its insti- “We do this via our own private ing, and also the role of alternative underwriting costs. uting to greenhouse gas emissions. It can either get closer to its end-cus- ance professional choses to be in the tutional ALM solution which supports cloud solution we offer to our cli- data to gauge how private assets are According to the Association The ABI estimates that UK insur- tomers or retire even more into the limelight rather than the shadows. and informs the ultimate decisions ents,” says Hoogendijk. “Within this performing, will mean you have to be of British Insurers (ABI), the ers alone hold in excess of £1.8 background. As the transactional being made by management. environment they can carry out more turnkey and possess the ability INSURERS’ INTEREST IN ESG/IMPACT INVESTMENTS extremely cold weather that hit trillion in invested assets. A May side of insurance becomes slicker and Hoogendijk clarifies: “If you look at HPC (high-performance computing) to provide services from front to back the UK in early-2018, for example, 2018 report by the Department for How insurance providers anticipated changing allocations to ESG or impact bonds more automated, it may appear even what we do in detail, we run a client’s which means they can report back to to remain a strong player in the market. resulted in insurers paying a record International Trade notes, however, less of a presence in our lives. balance sheet through 10,000 differ- management with results in the most “To achieve this, we have a dedicated £194 million for burst pipes in just a that only around 1.2 per cent of all 2016 2017 2018 2019 Ultimately, it may simply mean that ent economic scenarios for a range of desirable timeframe.” insurance group to provide insights, tools three-month period. assets under management in the UK we never take out an insurance con- alternative strategies. To this end, flexibility in the insur- and guidance for this journey, including Thomas Parmentier, European were invested sustainably, compli- +41% tract or make a claim at all. Brands “Using the analogy of a flight simu- ance space is also of vital importance different climate-change scenarios.” +36% insurance analyst at UBS Global ant with good environmental, social could simply provide us with guaran- lator, we simulate what would happen so organisations have the leeway, as Wealth Management, says the value and governance (ESG) principles, teed levels of service and use insurers to the ‘plane’ on 10,000 different well as the means, to enact change +23% of insured assets has increased which means the shock of decarbon- funding capital in the background. routes, through different economic from front to back, more efficiently. For more information please visit dramatically over the last decade, isation could be disastrous for those +13% Instead of having buildings and con- ‘storms’. We then help management By offering a cloud environment where www.ortecfinance.com chiefly due to the “increase in prop- who fail to adapt. tents insurance, for example, we may understand the implications of each machine-learning and APIs (application erty values and consequently claims Last July Moody’s, the agency -6% have a separate contract with a ser- route so they can either take action programme interfaces) flourish, wider for the industry”. that assigns credit ratings to cor- -10% vice company to provide cover. This to avoid upcoming storms or prepare ecosystem integration is facilitated and But insurance investment man- porations which can determine -16% provider will, in turn, use insurance Sian Fisher for unavoidable storms and under- flexibility is assured. agement is increasingly attracting their ease of access to funding, as one of several sources of capital to Chief executive stand which management actions can “We have a 96 per cent client reten- scrutiny and arguably highlighting issued a stark warning to insurers, -29% BlackRock 2019 maintain service-level agreements. CII be taken to ensure the plane is able tion rate which speaks to our ability to 18 FUTURE OF INSURANCE RACONTEUR.NET 19 Commercial feature

severity of natural catastrophes, OPINION and exposure to carbon-transition risk through their investment portfolios and the possibil- The increase in