Associate Director of Innovation George Stagg highlights the latest Insurtech trends that have caught his attention.
Calculating risk is the name of the insurance game, but predicting the future of the insurance industry itself could be the riskiest business of all.
Nevertheless, given the speed with which new technology seeks to shake up the market, we must first embrace the change, then stiffen the sinews and ride the artificially-intelligent wave – trying not to be put off by the fact that our Alexa devices might just be laughing at us.
The London Market can sometimes be tarred with the protectionism brush, but proactive companies are clearly not hiding from technology disruption. In fact, according to the technology research firm, Venture Scanner, London currently tops the global leader board with no fewer than 64 insurtech startups and counting – edging New York (61) and California (58).
An insurtech industry
All this activity is leading to the exciting creation of Insurtech as an industry in its own right. In fact, just a year after HM Treasury requested the establishment of the Fintech Delivery Panel, a new insurtech subgroup has been launched, with a remit to promote the development of more insurtech startups, fostering relations between the new firms, incumbent insurers and important market bodies and associations. Moving forward, the group’s ultimate goal is to nudge Insurtech firms towards scaling up and competing in the global arena.
In predicting this year’s seismic changes, however, some believe cracks will appear through which unsuspecting startups could fall.
While trial and error, and viewing failure as a key learning tool is central to all technology experiments, the Insurtech industry must learn quickly if it is not to become a venture capital black hole. Martha Notaras, a partner at venture capital firm, XL Innovate, is one who fears that if too many firms reach for seductive low-hanging fruit, those less robust companies could fall out of the money tree altogether.
Survival of the fittest
With this in mind, AFL’s own Incubator division will look to assist only those startups that can prove they have the resilience and adaptability to survive.
In this way, it is hoped the AFL Incubator will became a stable and open platform for Insurtech business, and a place where entrepreneurs can become truly embedded in the insurance industry, benefiting from our experience and contacts network.
There is so much more on the horizon, if the hype is to be believed. Some even think that this could also be the year that the crypto-currency revolution makes its presence felt in the insurance market. In January, the initial coin offering (ICO) of Slovenian-based startup InsurePal hit its cap of US$18 million after just 80 seconds of trading, with the new IPL tokens immediately listed on livecoin.net and further offerings expected.
And through the power of blockchain, startups like InsurePal are set to mount a significant challenge to the insurance status quo, using peer-to-peer (social proof) endorsements to lower premiums.
One more example of social proof – and another potential game-changer for the industry – comes via Tesla CEO Elon Musk’s recent insurance premiums rhetoric. Tesla is already rolling out InsureMyTesla, through its partnership with Liberty Mutual, a plan that lowers premiums by factoring in the car’s autopilot safety features and lower maintenance costs. Now Musk has hinted that the firm will go further, potentially bundling the insurance premium into the price of the car itself.
Whether through improved data gathering or the continuing growth of Insurtech startups, 2018 carries endless possibilities for disruptive technology in the (re)insurance market.
Even, perhaps, some tech developments that Mr Musk is yet to consider.
We have some significant news about the AFL Incubator coming soon – watch this space.