InsurTech Topics and Cascading Consequences

image

TLDR   “If you wait by the river long enough, the body of your next article will float by.”

(apologies, Sun Tzu)

My colleague and friend, Thomas Verduzco-Weisel asked me recently about articles I write, “Do you keep a topic list or inspirational thought list?”

I wish I was that organized and purposeful.  My source of what I write about?  What I see and read, output from all of you, from periodicals, from the news.  InsurTech news is seemingly omnipresent (self-fulfilling outcome from subscribed sources), and unfailingly topically fascinating as a publishing deadline looms.

Just for perspective I monitored the topics found within insurance sources that I subscribe to (not an exhaustive list):

*Inside P&C * Best Day * PropertyCasualty360 * Business Insurance * Claims Journal *

*Insurance Journal * InsurTech News * ITL Insurance Thought Leaders *

There are many other sources, some free, some paid subscriptions, all useful in their own way (do you have favorites?)  And the topics covered daily are diverse in nature, but keeping with the principle of the Insurance Elephant, all work to comprise what is insurance/InsurTech.

 

Within a three-day period I logged the following subject matter topics:

 

Fourteen self-described topics, and multiple mentions of each, with multiple interconnections among the topics.  A fire hose delivering the information that any participant needs to fully understand the InsurTech goings on.  Plenty of subject matter out there for publication fodder.  Problem is, there’s so much out there to keep track of!

 

Why is this significant for this column?  Education to the reader- you can’t read it all, but you can follow your connections/peers/competitors/adherents for direction and to pick up on opportunity/education or challenge.  There’s cascading consequences among the news pieces that are suitable for discussion.

 

Take this example:

ILS capacity drops in second quarter”, an article posted in Business Insurance.  Insurance linked security (ILS) capacity drops in the second quarter.  Hmmm.  A recent fair-haired child, ILS capacity (that had been growing as investors looked for better than market returns) reduction causes one to ponder.  Is it an effect of the bond market in general (beginning of the flight of capital to less risky long-term debt vehicles) and having financial fingers ‘burned’ during the past eighteen months of global cats?  And what of reinsurance costs- surely not to avoid rates based on demand?  Continuing, are climate change effects going to lessen because traditional reinsurance backing is returning to a bigger role?  Is Lloyd’s leveraging the opportunities?

Or this:

Latin American premium volume dropped in 2018,  guidance from Mapfre highlighted in PropertyCasualty360, the drop ostensibly due to currency depreciation in two major LatAm economies- Brazil and Argentina.   But didn’t the Softbank Vision Fund announce a multi-billion $US fund for LatAm tech startups, and aren’t InsurTech entrants considered tech?  Is SB missing something or are there factors other than relative premium dollars to consider?  Asking LatAm insurance observer and veteran insurance executive, Hilario Itriago, on the subject one gets an ideal example of how ‘putting pieces together’ is meaningful:

“in my view it shows the magnitude of the opportunity for the insurance ecosystem to diversify and grow the products and services base to new areas, when the base stays the same it is susceptible to changes like FX which is what the MAPFRE report attributes the change to.”

And from @Digital Insurance LatAm CEO, Hugues Bertin,

“in spite of new technology, C2/C3 people are underserved. Ciberinsurance (sic) remains immature. Distribution is only focus on traditional brokers (under pressure) or in Bancassurance (but nobody wants to go to the bank 😞) but 1/3 of economy will be soon in digital platform, so… connecting with digital ecosystem and understand new customer needs are a must. See Accenture article about living business opportunity Latin America is a huge opportunity to capture insurance growth.”

(I love those guys- such staunch advocates for the market, and rightfully so)

Opportunity in the industry prompted by macro monetary effects.  Monetary policy is fleeting whereas insurance industry growth in an active, well-funded market is the future.

Also consider this:

A simple recent recounting by the estimable insurance authority, Adrian Jones, of finding renter’s insurance cover in NYC prompted a lengthy social media discussion regarding insurance availability, pricing, variability, risk factors, purchase channels, etc.  No better example of a mature renter’s insurance market than NYC, yet what was observed in the discussion was not necessarily the epitome of InsurTech, nor agency market knowledge, ease of access, nor industry customer knowledge, etc.   Mature western insurance markets are more resistant to creation of ecosystems such as found in China, Honk Kong, or SEA due to those being built from ‘ground up’, but what stops an apartment/condo/co-op ecosystem from being developed in NYC?  Renter’s policies are not money makers for carriers but are entrée to other products- why not also to value addition complementary product/services as might be found within an ecosystem?  Condo bylaws and proprietary lease terms are public record; what prevents creation of a clearinghouse of same to help memorialize what constitutes insurable interest for unit owners and management companies?

And finally:

There are rumblings of an economic downturn in 2020- what might that portend for P&C insurers?  Fewer construction-oriented policies, loss of use and business interruption premium reductions, employee benefit schemes contract, moral hazard prevalence increases, self-insurance lessens and claim frequency rises, severity creep due to tendencies to inflate losses, reduction in auto sales and associated reduction in need for cover, protracted maintenance schedules resulting in higher frequency of equipment claims, and so on.  No sky is falling position here but there are considerations for the effects economic activity may have on insurance.  (and let’s not even say the ‘B’ word- Brexit.)

Plenty of topics to consider, plenty of interconnections to consider, and more available resources than available time.  And plenty of opportunities if you just step back and observe what is going on.

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).

 

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.