On the tides of insurance innovation



A person has three choices in life. You can swim against the tide and get exhausted, or you can tread water and let the tide sweep you away, or you can swim with the tide, and let it take you where it wants you to gosource

Clever words for one’s life path, perhaps not so clever for business, but interesting for an InsurTech discussion.

Option 3.  Going with the tide

What does a region do when it has a wealth of tech-savvy persons looking for a channel within which to focus its tech skills and entrepreneurial bent?  It becomes an incubator for technology start-ups.

What is it about some regions that fosters innovation/startup efforts?  A richness of resources and/or access to the existing industry infrastructure.  That’s the tide that can be ridden.

Example?  Israel.  There is one startup per 140,000 residents in Israel, a higher concentration than that of the UK (1/146K population), US (1/196K), or Germany (1/605K), or Singapore (1/800K).  India and China have plenty of startups, and plenty of population so their ratios are even lower.  data per Coverager.com

What makes Israel such a hotbed of tech and innovation?  That question was posed to the ‘big brother’ of Israel’s insurance startups, Kobi Bendelak, CEO of InsurTech Israel.

Kobi knows insurance; he has worked on the agency side (sold a successful agency), the consultancy side, and now the advisor/mentor/all around mensch side.

His answer?  Israel has an environment that fosters innovation through multiple factors:

  • It’s a ‘start-up nation. Well that’s a circular definition.
  • The culture encourages tech and creativity
  • Jewish ‘moms’ encourage children as entrepreneurs, not as doctors (Kobi’s words, not the authors)
  • Military service is mandatory and there is a tech focus within the military
  • Government supports a tech ecosystem
    • Less regulation
    • More government direct support
  • And the more there is startup success, the more others want to be part of the initiative.
  • A CEO of InsurTech Israel who is a commissioned Colonel. Tough love as big brother, and SOP enforcement as Colonel Bendelak.

As such, the world now has Waze (part of Google now, but FreeMap Israel at one time), Mobileye, Lemonade, GetTaxi, Atidot, SafeBeyond and many others.  And many current hopeful startups heading to InsurTech Connect 2019 later this month.

There are other examples to be explored in other columns- the UK (centuries of being a global financial leader), Silicon Valley in California- vast tech resources up and down San Francisco Bay.  New York.  Singapore.  India.  South Africa. Nigeria. Austria. Germany. Argentina. Ukraine. Canada.  Finland.  The globe.  Plenty of opportunity for going with the tide.

Option 2.  Treading water and letting the tide sweep you away

This is the default choice if you have tried to conquer Option 1, Swimming against the tide.  This is the optimist’s Plan B, often called The Pivot.  It’s not a bad option if the tide is not adverse.  Treading water can take you to Option 3 if the ‘treader’ is observant.

There are startups who have combined swimming against the tide and resting on the surface of the innovation ocean, many who have tired, but some who have tread, turned, and allowed the tide to take them elsewhere.  An example- the Aimviva Travel Club.

Aimviva was founded by former life insurance executive, Brad Emery, with the intention of providing a comprehensive and convenient traveler experience- in a yearly subscription format.  There are many on-demand options for travel, all providing similar benefits including payment when flights are delayed.  Aimviva’s approach was to provide value-additions to traditional travel cover, including lounge access, smart baggage tags, RFID blocking wallets, and travel SIM cards for mobile phones.  The concept was received with some customer acceptance, but the action did not fully address Brad’s passion for online insurance sales.  Rather than just treading water Aimviva performed a ‘mini pivot’, collaborating with SpeedInsure, part of Asia Pacific Investment Advisors in offering free Travel Bag Protection, and Pet’s Hospital Cash.   In exchange for the free cover the customers agree to solicitations for other products found within the carrier’s suite of services.  And- Aimviva is exposed to the pre-accelerator of the ecosystem that is Ping An.  Treading, then swimming to a tide that may take the firm to safer harbor.

Option 1.  Swimming against the tide

It’s easy to think the innovation water is calm when all that’s affecting it is tidal forces- few waves, deceptively calm waters.  Until one dives in and finds arms get tired swimming against the forces in the market.  On-demand cover carrier Trov encountered strong tides in its UK operations- just not the right model for that market, as the excellent Shefi Ben Hutta reported in June, 2019, Trov’s UK exit:

The Takeways

  • Convenience drives innovation- offer convenience and move along
  • Don’t (try to) change consumer behavior (or the product- unless you must)
  • Face the music- if you think of insurance, you work in insurance – don’t attempt to delight customers.
  • Focus on users, not customers

Trov are focusing their efforts now on the US market, and may find the tide less resistant to their effort.

Customers and insurance- inertia and strong tides.  One must have an irresistible force to bring to bear to affect an unmovable object that insurance can be.

Just this week an entrant into US crop insurance, Crop Pro (no website to cite), surrendered its license to conduct insurance business.  Over time the firm became unable to meet its claim needs due to failure to set reinsurance backing.  Crop insurance is a strong tide, and under adverse weather conditions within a narrow geographic region, crop insurance is a rip tide.  The company had good backing and able management- it simply didn’t have scale and dilution of its risk footprint, and then there is Mother Nature doing her worst. It’s tough to swim away from an adverse tide when operational and risk arms are entirely fatigued.  Sometimes the best approach to a tide is- staying out of the water entirely.  CropPro has not re-entered the insurance market but has pivoted to being an ag services company- change of ocean, not just tide.  (thanks again to Coverager for the synopsis).

It’s easy to discuss success or failure in terms of clever comparatives or analogies, particularly through backward looking lenses.  It might be just as easy for a prospective startup to simply look at who is in the water and how they are doing- swimming with, treading water, or being carried away by a market tide.  Knowing a new way to swim isn’t enough- an understanding of the forces that create the innovation tide must be had.

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.

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