Customer onboarding is an easy UX trick for Insurtech, but claims processing requires some hard AI tech 


A Singapore Insurance incumbent called NTUC Income has announced that it is using IBM Watson AI to change the claims process experience.

A lot of the traction for Insurtech ventures is changing the cost/speed/convenience of the customer onboarding experience. That is certainly valuable. For some types of low ticket item insurance, it is a game-changer. You only bother with low ticket item insurance if it is cheap and fast.

However, what really matters to consumers and so what will move the Net Promotor Score needle is the claims process. That is what drives rants (“the expletive deleted took ages and made my life hell”) and raves (“definitely recommend them, when xyz happened they paid promptly and without any hassle”).

Changing the claims process is hard. The journey has to start with a strategic vision from the top to make claims processing into a source of competitive advantage (in other words, to avoid being yet anther claims avoidance company).

Then the hard work starts.

Artificial Intelligence in the real world

In our introduction to Artificial Intelligence Week on Daily Fintech back in March 2016 we wrote that the “commercial rollouts of AI need a magic quadrant of:

• Technically feasible.

• A good ROI from replacing humans and improving predictability.”

What is interesting about the NTUC Income story is that it is not just about cutting costs. It is also about changing the user experience.

From their Press Release:

“Income receives an average of 14,000 hard copies of IncomeShield pre- and post-hospitalisation claims monthly, which are currently reviewed, assessed and approved manually. This contributes to a significant number of man-hours spent on data entry before claims data can be processed to enable pay-outs.

To address this challenge, Income is using IBM Datacap to better manage claims that are received in a variety of media types. Datacap combines advanced imaging, business rules, natural language processing and machine-learning technologies to automatically classify and extract information in real-time from most types of documents, thereby eliminating labour-intensive manual data entry from paper claims.

For the processing of data, Income is using IBM Watson Explorer, a cognitive search and content analysis platform at different stages of the insurance lifecycle. It can read and analyse structured and unstructured data, such as medical certificates and bills. The length of hospital stays, medical histories, surgical procedures, and other contributing factors are then taken into consideration by the system before it makes claims recommendations and calculates the pay-outs to policyholders. This will reduce the time claims assessors spend researching and matching claims information. Overall, it is anticipated to improve the quality and speed of the decision-making process as well as the consistency of the claims experience for policyholders.”

The company is planning for growth based on demographics – more health claims from an ageing population in Singapore. American, Japanese and European health insurance should take note.

Dancing Elephants

Incumbents are supposed to be slow moving elephants that agile startups can run rings around. That narrative plays out in banking, but not so much in Insurance. Many times we have found Insurance incumbents innovating at digital speed.

NTUC Income has innovated before:

“In October 2016, Income revolutionised the motor insurance industry with the introduction of two innovative motor insurance schemes – Drive Master and FlexiMileage – that leverage telematics to personalise insurance based on an individual’s driving behaviour.

The Singapore Insurtech story

This is another story of Insurtech innovation  from Singapore. We recently also covered CXA Group.

Coop = Social in Purpose, Commercial in Approach 

NTUC Income is a Coop. To American ears that sounds almost socialist. However think about what drives digital innovation -customer centricity, customer first, customer experience. That has to be at odds with a shareholder first approach. As they put it:

“NTUC Income (Income) was made different from the start. Founded in 1970 to provide affordable insurance for workers in Singapore, our mission has always been to maximise value for customers above profits for shareholders.”

Their motto is  “Social in Purpose, Commercial in Approach” 

The strategic vision from the top to make claims processing into a source of competitive advantage is a lot easier if you only have one master to serve – the customer.

The future is digital. The future is also coop. Welcome to the digital coop.

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Bernard Lunn is a Fintech deal-maker, investor and thought-leader. 

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Insurtech Exits enabling Claims Management As A Service


One of our top 10 Insurtech predictions-for 2017 was: 

“We will start to see exits as Insurance carriers buy startups. These will be either a) reducing operational cost eg in claims processing or risk management b) Robo Agents that enable carriers to sell direct, reducing their CAC and enabling them to compete with startup carriers. These will be small, quick wins for investors and entrepreneurs that will make it harder for the big full stack startups to get traction (as the incumbents will catch up to their innovation).” 

Actually some early deals already happened late last year.

The action so far has been in the claims processing space. This will bring a new layer of efficiency to this critical layer of the insurance stack. In this post we look at two deals:

– WeGoLook acquired by Crawford

– ISCS acquired by Guidewire

 The direction of travel is a Claims Management As A Service layer that will be used by customer-facing ventures. 

Neither deal got much attention in InsurTech media circles because the story lacked any hot VC fund, or mega number or hot space. However, we believe that Claims Management As A Service will be a huge enabler for innovation and in retrospect these will look like very smart deals.

WeGoLook acquired by Crawford

WeGoLook built a network of 30,000+ field agents who perform inspections and custom tasks. The field agents are called “Lookers”. A classic job is to do automotive and property inspections post claim.

While pundits like to talk about drones and AI, we believe that Augmented Intelligence is a more plausible future. A task might be 80-90% automated, but humans are still better at exception handling, particularly when fraudsters have a lot of motivation to cheat the machines is so high. Humans are very good at saying something like “that looks odd and needs a closer look”, but only if the machines are automating the easy stuff. Humans just need the machines to help aka to augment their intelligence.

WeGoLook is small exit at $36m. This makes a lousy story – no hot VCs, no big number in the headline – but it is still life changing for the entrepreneur if they have not raised a lot of money and a quick look at Crunchbase shows that WeGoLook was very capital efficient. It also bodes well for the acquirer. Capital efficiency is a good thing unless you are in the business of deploying other people’s money.

The acquirer, Crawford, is a publicly listed company

The “gig economy” (a much more real term than sharing economy) is the new normal and WeGoLook adds another type of gig to give people additional income.

ISCS acquired by Guidewire Software

This is a bigger deal at $160m. Again the acquirer, Guidewire, is publicly listed. At a revenue multiple just shy of 4 on 2016 ISCS revenues of $41m, the multiple looks about right for a niche cloud based SAAS business.

The big theme here is that what Salesforce started is now going mainstream. Cloud will be the norm for all business apps. Guidewire currently targets large Property & Casualty insurers. Acquiring ISCS gives Guidewire entry into the small carrier market.  ISCS targets smaller Property & Casualty insurers, two-thirds of which have less than $100 million in revenues.

Business As A Service

ISCS is traditional Software As A Service. It is a great business – strong growth margins and good revenue visibility. There are lots of niches such as small P&C carriers. But this opportunity has been visible for a while so each niche has multiple players. WeGoLook could be described as Humans As A Service. Where we see the puck headed is something that combines elements of both services into one higher level. Generically we can call this Business As A Service, but within a niche we are more likely to see names such as Claims Management As A Service.  This is a natural evolution of the software business through Past and Present to the Future:

  • Past = Perpetual Licensing. Close a sale and send a disk with the software. All the hard work (and all the reward) of delivering the business result now passes to the customer. The software was the secret sauce by itself. This is like selling yeast to people who want bread; yeast is the active ingredient, but it is useless on its own.
  • Present = Software As A Service. You add hardware to deliver the software over the Internet. In cooking terms, you add water, salt, flour (commodity ingredients) to offer a loaf of bread.
  • Future = software enabled Business As A Service. This includes hardware – that is now the baseline. Software Enabled Business Services also include 24/7 guidance by human experts and business process innovation and digital media that attracts customers to your customers and co-branding partnerships and proprietary data. To stretch the analogy, this is now a restaurant where bread is one item (given free while waiting for your appetizers).

As an example, think of a payment network such as Visa, Mastercard and Amex. These are Software Enabled Business Services. Yes, these payment networks have software at the core. Yes, they own the hardware servers that the software runs on. Yet they don’t license that as a SAAS product to banks. They wrap it into other services to deliver transactions to consumers via Banks. That is how Visa, Mastercard and Amex turn their secret sauce into Unfair Advantage.

Claims Management As A Service will be a great platform business and will enable lots of innovation by customer-facing ventures (which could be full stack Insurtech or traditional Insurance after a digital transformation). The WeGoLook and ISCS acquisitions point us towards this future.

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Reporting from #InsurTech2016 in Switzerland – the first country where Bitcoin may go mainstream


Daily Fintech is a global business that happens to be based in Switzerland. Our Subscribers (over 13,800 as I write) are from all over the world, pretty much tracking the growth of Fintech globally. 

So we don’t take sides in the Fintech capital of the world debate. I have enjoyed living in London, New York and Singapore and have always looked to San Francisco for the new innovation. I moved to Switzerland for lifestyle reasons (great skiing and great place to raise kids). Daily Fintech now has the bonus that Switzerland is emerging as a major Fintech center.

So on Tuesday I bought a ticket and hopped on a train to Zurich (the train is part of the story) to attend the InsurTech 2016 event run by Finance 2.0.

The conference was about InsurTech, so I went looking for insights about Insurance as it relates to Bitcoin, CryptoCurrency and Blockchain. Zurich and Zug are the two ends of Crypto Valley. Zurich is also a leading center for Reinsurance and Zug is home to fast moving global capital pools (aka Hedge Funds) that are moving into Reinsurance. So this promised to be a stimulating conference.

Why Switzerland may be the first country where Bitcoin goes mainstream

Last year we reported on an event that took the innovation business by surprise – the first Silicon Valley company (Xapo) moving to Switzerland (as opposed to the normal flow going the other way) because the laws in Switzerland are better for the protection of cyber assets (which is what Xapo is selling).

Last year we also reported on a more obscure fact, but one that is critical to Bitcoin going mainstream in Switzerland. At a MeetUp in Geneva in March 2015somebody mentioned Switzerland being officially a multi-currency country and that led me to understand the WIR. This is an obscure currency in Switzerland used by very few people that was created after the Great Depression. Despite its obscurity, it is legal tender. So other currencies can be legal tender. That includes the Euro; often prices are displayed in Euro as well as Swiss Francs. More interesting for us Fintechers is that Bitcoin is also a legal currency in Switzerland.

Adoption is NOT in countries with failing currencies

Many people were drawn to Bitcoin by dreams of stateless trust based on math replacing more authoritarian governance. So the meme got established that Bitcoin would first go mainstream in countries like Argentina; we debunked that theory here.

Then we indulged in science fiction fantasies around Greece or Scotland adopting Bitcoin in a breakaway from the Euro or the Pound.

None of this came to pass.

The use of Bitcoin in Switzerland could not be more different. The Swiss love the Swiss Franc, as do investors globally who are concerned with long term wealth preservation. The Swiss Franc is as far removed from being a problem currency as you can get.

Recent news from Switzerland indicate that exactly the opposite may come to pass – mainstream adoption happens first in a country where citizens have an unusually high amount of trust in their currency and the government that issues the currency.

Two news items show Bitcoin moving mainstream in Switzerland:

Swiss Railway ticket booths become Bitcoin ATMs.

Residents in Zug will be able to pay taxes and government services in Bitcoin.

The latter is still a pilot and limited to one area. If it gets extended and is copied by other regions it will be a game-changer. 

The former is a national rollout in a few days (11 Nov).

Swiss Railways and the toothbrush test. 

Even rich people use public transport in Switzerland so it will always get investment. You can get to a remote part reliably in comfort with just a few changes. The mobile app that guides you through this process passes the toothbrush test

That background matters for American readers who might be ready to dismiss this as Amtrak offering Bitcoin – that would be both unlikely and probably ineffective. SBB (short hand for Swiss Railways) is a core part of life in Switzerland.

So when SBB moves into Bitcoin it is a seriously big deal.

Settlement Latency in Insurance and Blockchain

Switzerland is a leader in a) Blockchain technology (Crypto Valley) and b) in Reinsurance. So it is natural that the two should come together. Two talks at the InsurTech 2016 event in Zurich focussed on this intersection.

One talk was from Burak Yetişkin (Accenture) and the other was from Paul Meeusen (Swiss Re). From this we learned about the Blockchain Insurance Industry Initiative (B3i), which has Aegon, Allianz, Munich Re, Swiss Re and Zurich as founding members. This is a bit like the R3 consortium in the banking realm. The aim is to work on standards to reduce the Settlement Latency in Insurance. The potential pay off is huge. Big processes and all the related costs will be eliminated. Even bigger is the pay off from reduced counterparty credit risk for all the players in the stack (broker to insurance to reinsurance). If settlement takes 4 months (from claim to cash), then all the companies in the process have to manage counterparty credit risk.

Even bigger than this is the big pay off for consumers. This is missing from the move to real time settlement in the capital markets. Going from T+ 2 or T+3 to real time is good but going from 4 months to a few days or few hours is massive. Imagine putting in an insurance claim and getting a message a few hours later saying “your claim has been approved, with some deductions detailed below, you will be paid tomorrow”.

Now connect to the Bitcoin story and and imagine an extension to that message that says “if you gave us a Bitcoin wallet address you should already find your cash in there”. When you have suffered a tragedy that kind of immediacy is critical.

This becomes feasible because we move from a consumer defining the event (crash, fire, hurricane etc) to those events being validated data events stored on the Blockchain. Then the consumer simply says “policy # xxx suffered a loss of yyy in event aaa”, with each of those being verified data points in an immutable database that all have access to.

All the participants – customer, broker, insurer, reinsurer – will apply their processes to those data points.

No amount of improved mobile front end will make much difference to the full lifecycle experience, but bringing the time from claim to cash from 4 months to days or hours will be a total game-changer. That is why we envision Blockchain getting its first big use cases in Insurance (before we see big rollouts in banking).

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Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge platform.

Lemonade could collapse the Insurance stack #insurtech


InsurTech moved into the limelight on 8th December 2015 when it was announced that Sequoia Capital had done a $13m seed investment into a stealthy venture called Lemonade. Call it the Sequoia effect. Could this be another WhatsApp story (with a $19 billion exit only 3.5 years after Sequoia invested in their A round)?

Lemonade remains stealthy. They have not said what they plan to offer beyond broad generalities. However there was more news this month which gives some interesting clues when it was announced that:

“Berkshire Hathaway and Munich Re back revolutionary P2P insurer”

There were others including: Everest Re, Hiscox, Transatlantic and XL Catlin plus a syndicate at Lloyd’s of London. The amount invested was not revealed. That is not the issue. Lemonade can clearly raise as much as they need. What is significant is the entry of the Reinsurance players. We analyze the PR to figure out where the puck is probably headed.

The current Insurance stack

The insurance industry works through a 3 layer stack:

  • Layer # 1: Brokers. Their job is to gather premiums from customers.
  • Layer # 2: Insurance Companies. Their primary job is claims processing. They take in premiums via brokers, invest the cash flow and pay out claims when needed.
  • Layer # 3: Reinsurance Companies. They are the payers of last resort. They insure the insurance companies. Their job is to have enough capital to pay out claims, even if the models did not predict the volume of claims.

Cui Amisit

During disruption, the big question is who loses? WhatsApp disrupted the Telecoms companies. Who will be disrupted by Lemonade? The news clearly signals that it won’t be the Reinsurance Companies.

Normally one would assume the Brokers to be most at threat. Digitization allows consumers to buy direct. Some Insurtech ventures such as Knip (out of Switzerland) position as brokers. We can call this type RoboBrokers. They serve the traditional job of gathering premiums for Insurance companies; they just do it more efficiently by using digital tools.

Lemonade is probably going after bigger fish. The clue is in the statement from the CEO of Lemonade in the press release:

“Lemonade is the only insurer that doesn’t make money by denying claims”.

Insurance is a rather one-sided business. As consumers our commitment to pay premiums is absolute. If we stop paying we are not covered. The commitment of the Insurance company is to pay out – in certain circumstances. There is a contract, but we have to trust the other party and the other party obviously has an incentive not to pay out.

Lemonade has not revealed how they will do this – they obviously want to stop copycats. The backing of so many big players and the move by a 25 year AIG veteran to become Lemonade’s chief insurance officer plus other key hires, indicates that Lemonade must have a good plan even if they are not yet revealing it publicly.

So we can only speculate at this stage based on the two biggest concerns that consumers have when it comes to Insurance:

  • Concern # 1: Will the Insurance company have enough money to pay me? This is why Insurance is so highly regulated. Scamsters love a business where you can collect premiums and disappear before the claim is paid. The announcement that Reinsurers (the biggest pools of capital out there) are backing Lemonade is designed to allay that fear.
  • Concern # 2: Will the Insurance company find a reason to deny my claim to avoid paying me? Lemonade cannot simply say “trust me”. That is how the Insurance industry works today. Consumer could feel confident of a Smart Contract where they could see that the money is automatically paid out when certain conditions are met (based on a Blockchain based algorithm with the money already in some form of escrow). This is easy in Life Insurance because the event (dead or alive) is binary. However Property & Casualty is more nuanced (how much damage? Who was at fault?) and Health Insurance has a notoriously complex claims process. How Lemonade automates the claims process will determine their success. How will they stop scamsters making false claims? How will they verify the loss? Is this where they will turn the claims process into a P2P process (ie get the crowd to verify what happened)?

Insurance companies can see the damage done to Telecom operators by over the top messaging services such as Whatsapp. They may now need to think hard about the impact of InsurTech disruption.

Daily Fintech Advisers provide strategic consulting to organizations with business and investment interests in Fintech. Bernard Lunn is a Fintech thought-leader.