Tropical storms pour flurry of topical Insurance news in advance of Insuretech Connect

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I do not want the title of this week’s post to upset anyone who has been affected by any of the recent storms we have seen hitting the US or Caribbean Islands.  My thoughts and prayers do go out to those and their families that were caught in these awful storms.

These storms have been in the headlines for weeks, not only for the devastation that they are causing to people’s homes and businesses, but also, how insurance will play into the process of rebuilding in these areas.

In parallel to reading the various articles about this, I have also been preparing to attend my first Insuretech Connect in a couple weeks time.  As I have been reading through the various topics and speakers that will be available, along with other current news relating to Insurance and Insurtech, I wanted to list out some of the things I’ll be looking to learn about more and discuss with those of you attending Insuretech Connect.  

(This is also some foreshadowing to some more detailed topics I will discuss in future posts!)

Catastrophes – reminding us just what is important about Insurance

Doing a quick Google news search of the terms ‘hurricanes insurance’, the other day, a variety of headlines came up, a sample of which included:

Flood insurance rates impacted by hurricanes

How to get the most from your insurance company following a natural disaster

Hurricane Irma will hammer insurance industry — up to $65 billion in damage is projected

As an insurance professional, these articles bring to mind the 3 pillars of Insurance. These three pillars are critical in the Insurance supply chain, and wherever you sit in that chain when it comes to Insurtech, you need to understand these 3 fundamental things (these pillars are applicable to all types of insurance, not just catastrophe insurance).

  1. PricingWas the policy I purchased priced properly to take care of the costs of the insurance company running their business and will they have enough
  2. Reserves – to pay my
  3. Claims – in a timely manner.  Cue…

Smart contracts are the future of Insurance (and everything else)

AXA has launched a new travel insurance product last week which will utilize smart contracts based on the blockchain to payout claims.  AXA is not the first to launch an Insurance policy with a smart contract, but it does represent a trend for both the Insurance and financial services industry as a whole to migrate to blockchain.  The blockchain and it’s uses and benefits for the Insurance industry are a completely separate topic that I will write on in another post.  This trend is so important because of the third pillar, claims.  

In a conversation I had last week with someone influential in the Insurance industry, we agreed that the key inflection point for a customer in the Insurance supply chain is at the point of claim.  While many Insurtech startups and Insurance incumbents are focusing on the purchasing experience of Insurance for a customer, I don’t see enough focusing on the claims process.  Claims have many areas to think about:

1) How do you respond to a policyholder the moment you know they have to make a claim?  Making a claim means that you have just had a potentially devastating moment in your life (health procedure, car accident, death of a loved one, etc).  What is the first reply an insurance company gives to a policyholder when they find out they make a claim?  How do they demonstrate empathy with this customer, who may be dealing with tragedy?

With AXA’s product, a policyholder doesn’t even need to file a claim.  That’s the best reply an insurance company could give me when needing to make a claim…’We realize that your flight was delayed and we’ve credited money into your account as part of the claim for the coverge you have bought.  There is nothing else you need to do now…enjoy the rest of your travels.’  Brilliant!

2) How was the assessment of the claim done?  Was it based on a predetermined set of rules that was clear and transparent or was a decision made by some claims adjustor without any reason?

3) How quickly will the claims get paid?

There are many solutions that are in the market now which address these questions in silo.  Further, it is much easier to address these questions in more common, smaller-sized claims.  As full stack Insurtech moves more into the life and health space, these questions will need to be more closely analyzed and carefully addressed.  

The next topic does not relate to the recent news on Hurricanes, but was in the news last week and are very interesting when it comes to Insurtech, and is a common theme we have covered here in Daily Fintech before

Insurtech doesn’t need Insurance incumbents, right Reinsurance incumbents?

Last week, Metromile announced their partnership with JLT Re.  Since I have been following Insurtech, I was amazed by the amount of work being done by Reinsurers in this space (particularly Munich Re and Swiss Re).  I say I was amazed, because once I thought about it more, it made complete sense as to why they are.  In the most basic of explanations, Insurers use Reinsurers to pass on some of the risk it takes on from the business it writes.  However, if Insurtech, and the various benefits that can be brought to an Insurance incumbent in terms of more efficient and dynamic pricing, better claims ratios with less fraud and less expense overhead with use of digital (to name a few), will those same incumbents still need to pass on that risk to Reinsurance?  Well, it seems to me that Reinsurance incumbents don’t want to know the answer to that question, and that’s why they are so keen to enter the Insurtech space with authority and dominance – to ensure their relevance in the future.  

Speaking of Reinsurers and travel insurance…

I look forward to seeing many of you at Insuretech Connect in a week and a half to discuss these topics and more!

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Stephen Goldstein is a Rainmaker, Insurance aficionado and Insurtech deal-maker.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world.  Ride the Fintech wave by reading us daily in your email

Zhong An IPO tells Insurance incumbents that full stack Insurtech has arrived

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The day has arrived – Zhong An has secured approval for its IPO on the Hong Kong stock exchange!

CB Insights has done a great job breaking down the IPO prospectus.

Zhong An is China’s first fully digital insurance company that was founded in 2013 through a joint effort of Ping An, Tencent and Alibaba.  As mentioned in the link above from CB Insights, Zhong An started with a shipping insurance product for merchants and has now expanded to over 240 product lines.  They have sold 7.2 billion insurance policies, serve 492 million customers and have close to $500 million in gross written premium in 2016.  

At Daily Fintech, we have covered the lead up to the Zhong An IPO here and here.

This is big news, folks.  Here are a few thoughts as to why I think this is so big:

  • Insurtech provides a viable full stack offering to consumers
  • China has now helped to push Asia to the top of the ‘Insurtech leader’s club’
  • Alibaba first, Amazon next?

Insurtech provides a viable full stack offering to consumers

We keep hearing about the number of full stack Insurtech start ups that are have been around and are continuing to pop up.  As I mentioned in last week’s post, these are filling up the ‘new’ circle.  However, for one of these Insurtech startups to now be listed, is huge.  Regardless of how this IPO or the eventually publicly traded stock performs, this represents a big stake in the ground to incumbents to say, ‘Insurtech is here, here to stay, and if you don’t transform, you will continue to see IPOs of other full stack offerings which will disrupt and/or put you out of business’.   More importantly, the public will take notice of this, hopefully doing for Insurtech what Netscape did for the Internet.  

All of us in the Insurtech community send a thank you to Zhong An for making Insurtech mainstream.

China has now helped to push Asia to the top of the Insurtech leader’s club

Silicon valley has been the hub for technology for decades.  Insurtech start-ups, accelerators and VCs are all over there.  There are many more across the states, in big cities like New York and Austin, but also smaller ones like Des Moines and Detroit.  The US is and will always be a big player in any arena that has to do with technology.

In Europe, Insurtech is an everyday word in places like London and Germany.  Start-ups, accelerators, incubators and investors alike are in these areas and building impactful Insurtech solutions.  

But none of these places, have yet to have an Insurtech start up on a listed exchange.  Being listed on an exchange means you’ve made it.  It means that you’ve earned a seat to be considered with the big boys and that you are recognized as a ‘real’ company.  Asia can boast that now.  Couple that with the amount of things happening in work being done in Singapore to make it a Fintech/Insurtech hub – Asia sits at the top of the charts in the Insurtech ranks currently.  

Alibaba first, Amazon next?

I’m not the first person to mention this, as can be found in this post from 2014 and another in 2016.  Alibaba has shown that it has the ability to scale its business across many different verticals (including insurance) .  A big reason for this is because of its brand presence and customer service.  Alibaba and Amazon are almost synonymous at this point.  So one must think… when will Amazon get into the Insurtech space?  Zhong An got started by offering Insurance for e-commerce; that is clearly no longer low hanging fruit. Amazon is not shy about moving aggressively into adjacent markets and so we can expect to see a big move soon.

While Amazon offers protection plans currently, the key difference between what they offer and what Zhong An offers is that Amazon’s products are underwritten by insurers, while Zhong An’s products are underwritten by Zhong An.  This would make the product offered through Amazon and not by Amazon, unlike the products which Zhong An offers, which they can offer through a number of different partners.

However, with the amount of investment and focus being made into Insurtech by incumbents, especially reinsurers, who’s to say that they won’t partner up with Amazon and launch a company similar to Zhong An in the US?

As for Zhong An, what’s next?  Will they follow the path of Alibaba and start expanding in Southeast Asia?  Or will they continue to expand their product expansion and reach in China solely?

We will continue to monitor how Zhong An does post IPO, as well as how this IPO affects the Insurtech industry.

Here’s to wishing you great success with your IPO, Zhong An.  I sincerely hope you do not follow the same share price trajectory of Netscape or the Lending Club

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Stephen Goldstein is a Rainmaker, Insurance aficionado and Insurtech deal-maker.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world.  Ride the Fintech wave by reading us daily in your email